ABSTRACT
A survey research was
made in carrying this project, clearing department as a profit generating
department in banking institution.
This research was
carried out to reveal clearing as means of sustaining banks and suppressing
frauds. The population size of the study comprises of all staff of Enugu
main branch of United Bank for Africa PLC (UBA), which were 98 staff. And
the sample size for the study was 79 staff.
Hypothetical statements
were used to find out whether the clearing as a means of sustaining bank and
suppressing fraud in banking institution. These were about identifying
whether clearing department really to describe how clearing department
contribute in the profit of the banking institution, as was gotten from the
questionnaires distributed to the staff.. from the result after the
analysis it was concluded that clearing department should be known as one of
profit generating departments in banking institution in general and United Bank
of Africa PLC Enugu main branch in particular.
TABLE OF CONTENT
CHAPTER ONE
1.0
Introduction
1.1
Background of the study
1.2
Objectives of the study
1.3
Research questions
1.4
Statement of hypotheses
1.5
Scope and limitation of the study
1.6
Significance of the study
1.7
Definition of terms
CHAPTER TWO
Literature Review
2.1
Overview of milestone in the development of clearing systems
2.2
Classification of clearing cheques
2.3
The various methods of clearing cheques and other financial documents
2.4
Correspondent banking clearing
2.5
General principle of cheque presentation and clearing.
2.6
The authorized clearing system in Nigeria
2.7
Empirical framework
2.8
Summary of related reviewed literature
CHAPTER THREE
Methodology
3.1
Research Design
3.2
Area of study
3.3
Population of the study
3.4
Sample size determination
3.5
Instrument for data collection
3.6
Validity of the instrument
3.7
Reliability of the instrument
3.8
Method of data collection
3.9
Method of data analysis.
CHAPTER FOUR
4.1
Data presentation, analysis & Results.
CHAPTER FIVE
5.1
Discussion of Results
5.2
Conclusion
5.3
Recommendation
5.4
Suggestion for further research result
5.5
Limitation of the study
References
Appendix
LIST OF TABLES
4.1
Response rate on questionnaires
4.2
Sex of respondents
4.3
Age of respondents
4.4
Designation of respondents
4.5
Respondents work experience
4.6
Analysis of the respondents
4.7
Analysis of the respondent to questions
CHAPTER ONE
INTRODUCTION
1.1
BACKGROUND OF THE STUDY
One of the functions of the commercial banks in
Nigeria is clearing of cheques through Central Bank of Nigeria.
Clearing of cheque could be defined as the
process by which the validity of cheque is confirmed before the collecting
banker gave value to the value.
According to Nwabufor (1998:12): cheque clearing
is necessary because some unscrupulous persons do issue cheques when they have
no money in their accounts to back-up the cheque. He opined that due to
this fact, banks need to device a means by which they will use to verify
whether a cheque is actually backed up by deposits in the account of the person
issuing out the cheque, and also that the cheques is properly drawn before they
credit the account of the person depositing the cheques (drawee), this process
means that the cheque when deposited, must get the drawer bank where the drawer
has an account for verification. It is only the bank that can confirm if
there is enough money to carry the cheque by looking into the customers ledger
account. They will also make sure that the cheque is properly
drawn. He argued that if that bank is satisfied that there is enough
money in the bank account of the drawer before the bank can get the value of
the cheque.
1.2 STATEMENT
OF THE PROBLEM
This function of cheque clearing is mainly
carried out by clearing section of the current account department of funds
transfer unit as many bank my name their own. Every commercial bank that
issues and receives cheque must carry out this function of cheque clearing.
Apart from the use of notes and coins, debts are settled between parties by
other means order, bill of exchange, travelers cheque, dividend warrant,
promissory note, cheque issue, and bank draft. All these are negotiable
instruments and when such instruments mentioned above are deposited into bank
accounts the clearing department of the receiving bank has is as a duty to
compile those instruments according to specification and passes them into the
channel of the purpose of obtaining payment.
According to Anyanwaokoro (2001: 75) the
processes involved in cheque clearing using single terms thus at the early
stage of banking history, inter bank settlement were done directly between
banks. He said that if the customer of one bank receives a cheque from
the customer of another bank and pays the cheque into his account in his bank,
his bank will take the cheque directly to the banks of the customer directly to
the bank of the customer who issued the cheque or the drawer of the
cheque. The drawer’s bank will confirm whether or not that drawer has
enough money in his account to carry the cheque. If these is money in he
drawer’s account, they will credit the account of the presenters of the cheques
bank or the drawee’s bank and drawee’s bank will in turn credit the drawee’s
account; this process is too cumbersome and difficult, if for example, there
are up to thirty commercial banks operating within a locality and several
cheques were received by one of the banks, it will cost that bank too much time
and money to go to all these banks one after the other to clear the cheques.
1.3 OBJECTIVE
OF THE STUDY
For this difficulty, the central bank came to
relieve from them such difficulty by introducing a clearing house where all the
banks come together to clear their cheques in each working day. Each bank
presents to the central bank the cheques of their banks paid into it by their
customer to the payee bank.
The banks will thereby debit and credit each
other’s account accordingly. With this process, payment by the use of
negotiable instruments is made easy for the banks and cost is minimized.
Barley (1998: 62) reports that the banking
institutions make money in clearing activities by charging commission on any
cheque cleared. He made clear that the bank situated in an area where
there is Central Bank branch do clear their cheques through his Central Bank
Clearing System. This system enables cheques to be used for the
settlement of debt between customers banking in different banks. He also
made it known that for the banks’ cheque clearing system is a cheap and
conveniented way of exchanging each other’s cheques. He opined also that
there are some procedures, which is adopted by a bank which intends to clear
cheques through the Central Clearing Houses.
1.4 SCOPE
OF STUDY
PROCEDURE FOR CLEARING CHEQUES THROUGH CENTRAL
CLEARING HOUSES.
(i) The
bank will first receive cheques drawn on other banks but paid in by its
customer.
(ii) The
banks will list the cheques by maching them.
(iii) The
cheques will then be sent to the clearing department of bank.
(iv) The
following day after the cheques have been received and machined, the cheques
are sent to the Central Bank for clearing by the banks representatives.
(v) The
cheques will be exchanged with those cheques presented by other banks
representatives that is, bank A will collect from the banks that brought bank
A’s cheques and bank A will present to them all the cheques belonging to them
which they received from their customers.
(vi) Presentation
forms are completed and the respective debit and credit entries are made by the
representative of every bank that comes for clearing at the Central Clearing
House.
(vii) These
cheques brought from the bank’s clearing house are sorted and sent to the
respective branches of the same bank on whom he cheques are drawn.
(viii) The
cheques are processed at the branch offices.
1.5 RESEARCH
QUESTION
1. Is
clearing department necessary in banking industries?
2. Do thy
really waste time in the clearing house
1.6 HYPOTHESIS
OF THE STUDY
HYPOTHESIS 1
Ho:
The clearing department does not generate sufficient profits to banking
institutions.
HI:
The clearing department generates sufficient profit to the banking institution.
HYPOTHESIS II
H0:
Full computerization of the clearing department will not reduce the period if
takes to clear cheques.
HI:
Full computerization of the clearing department will reduce the period it takes
to clear cheques.
There are some basic assumptions of this
research which include:
(1) All
the banking institution in the country have a clearing department.
(2) All
the banking institution in the country are victims of problem of delays of the
clearing houses during cheque clearing.
The main purpose of carrying out this research
as initially stated is to pin point and discuss the major functions of the
clearing department in the banking institutions in Nigeria and to show their
contribution to the profit of these institutions.
This research study aims also at suggesting the
ways of improving the operations of clearing department in banking institutions
in Nigeria.
1.7 SCOPE
This research study is concerned with the
clearing departments of the banking organization in Nigeria and on their cheque
clearing. It will be limited to the staff of (UBA) United Banks for
Africa PLC Enugu main Brach precisely.
1.8 SIGNIFICANCE
OF THE STUDY
The findings of this study will be of immense
benefit to the bakers their customers, the government and the countries economy
in general with the improvement of the clearing system that will be suggested
in this research, the delays and frustrations of the clearing exercise will be
reduced. This will quicken the operations of the banks thereby generating
more profits for the banks. In addition to this, the banks customers will
be cleared and certified before collecting their money since these will be done
as soon as the cheques are presented in clearing operations thereby increasing the
capital base and profit of the banks.
The government will benefit from this increase
in profit by taxing the increased profit of the banks and more revenue
generated to the government. The government, when invested this revenue,
there will be more money in the economy and more businesses thereby reducing
unemployment.
In this write up, the researcher encountered a
number of problems and constraints. The limited foreign literatures on
the subject is the major problem among other problems encountered in this
bank’s research study, other problems encountered are the cost of materials and
transportation.
1.9 DEFINITION
OF TERMS
(1) Banking
Institutions: These are all types of financial institutions that do banking
works to the customers. These banks include Central Banks, merchant
banks, development bank, agricultural banks.
(2) Central Bank:
This is the apex financial institution in Nigeria, which is responsible for
printing and issuing Nigeria currency. They also do the work of clearing
cheques for the commercial banks. Therefore, cheque clearing is done
through the Central Bank of Nigeria
(3) Commercial
Loans: These are the banks that deal with accepting deposits from customers
and give bank credits to them also. They receive cheques from customers
and clear them through Central Bank of Nigeria.
(4) Clearing
Department: This is a department in the commercial banks where cheques are
compiled, sorted and arranged for going to the clearing house where they are
shared to the owners’ banks.
(5) Cheques
Clearing: This is process of confirming validity of cheque before the
collecting banker gives value to the cheque.
(6) Profit
generating Department: This is any department in an organization that
contributes to the profit of that organization.
(7) Profit:
Profit could be defined as the surplus which becomes due to the owner or owners
of the business as a result of a successful period of trading.
Department | Banking and Finance |
Project ID Code | BFN0071 |
Chapters | 5 Chapters |
No of Pages | 70 pages |
Methodology | Chi Square |
Reference | YES |
Format | Microsoft Word |
Price | ₦4000, $15 |
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Contact Us On | +2349067372103 |
Contact Us On | +2349094562208 |
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