The document describes the foreign cheque collection process at Model Bank. It outlines the current manual process and issues with it. It proposes developing an automated system to computerize the process. Key reports needed include covering schedules for cheques sent to collecting banks, reports of cheques sent and realized sorted by collecting/correspondent bank and currency, and a report of outstanding cheque collections by branch. Validations in the new system would check that correspondent banks, currencies, and conversion amounts are correctly entered.

1. Foreign cheque Collection System
1. Introduction to the process- Description of process
2. Details of the process steps
3. Problems with manual process
4. Proposed system for computerization
5. Required reports
6. Checks and Validations
1.Introduction-Description of the process
Cheques drawn on Banks outside India are collected for customers by Model
bank .All branches are authorized to accept, collect and credit the proceeds of
such instrument to customer’s accounts.A customer can instruct the bank to
either convert the full realized amount of cheques into Indian Rupees to be
credited to his Indian Rupee account,or credit the full realized amount in to
aForeign currency account in the currency of cheque.
There are three types of branches in the bank as far as this function is concerned.
1. Branches not authorised to deal in Foreign Exchange(NAB).
2. Branches authorised to deal in Foreign Exchange
3. Overseas Branch(OSB)
Cheques are sent to correspondent banks abroad for collection. A
correspondent bank collects the amount of cheques from drawee banks and

2. credits the realised amount of cheques to an account of OSB maintained with
them.
On receiving information about credit of their account, OSB converts the
instructed accounts into Indian Rupees, and in turn transmits the proceeds to
branches (both the converted Indian Rupees amounts as well as unconverted
foreign currency amounts for final credit to customers.)
In case of dishonored cheques .OSB or AB concerned receives the returned
cheque directly from the collecting banks
The banks has a centralized Core Banking System where accounting entries
can be passed for crediting customers ‘ accounts at any branch.
Procedure
The present manual process is described below.
1. NABs accept the cheques from customers and forward them to OSB
2. ABs accept the cheques tendered by the customers and forward them
to collecting banks abroad by themselves .They send a copy of the
collection schedule to OSB.
3. Branches enter the details of the customer ,cheque ,accounts to be
credited on realization ,and the amount to be converted into Indian
Rupees out of realized cheque amount .In case of ABs ,they also record
Information about the correspondent Bank and account where the realized
Amount will be credited to the bank’s account
4. OSB enters the cheques received from NAB’s in a register .Cheques are
deposited at the OSB by its own customers are also entered in the same
register, under the same category.
5. OSb enter the details of the cheque sent by ABs direct to collecting bank in
the same register, from the details in the copy of the covering schedule
sent by them.

3. 6. OSB receives the realized amount of cheques sent for collection to all
foreign banks .On receipt of realization advice, OSB converts the realized
amount into rupees and remits the realized rupees amount ,less their
commission ,to concerned branches(both ABs and NABs).A the same time,
it marks the status of cheques ,rates of exchange, converted rupee value,
commission and date of realization in register maintained by them.
7. On receipt of the IBGA credit, branches respond to the advice and credit
their customer. They also receive the liability entries at the same time.
Branches have to take care of the reserve in case of preliminary credit
received in respect of cheques on the USA according to their discretion.
2. Details of the Process steps
Authorized Branches
o Enter the details of the cheque sent, Customers name in a
register.
o Send cheques directly to foreign bank.
o Covering schedule copy is sent to OSB
Non Authorized Branches send cheque direct to OSB.They keep a record of
the cheques sent in a register.
OSB enters the cheque from ABs with prefix “BOBC” and also the branch
reference number.
OSB enters cheque from NABs without the prefix “BOBC”.Branch reference
number column is not entered.
Cheques for the local customer of OSB are similar dealt with
On the receipt of realization message,OSB records the details of realization,
converts the appropriate realized amount into Indian rupees and passes
necessary accounting entries.
3. Problem with manual process
Manual register are maintained at branches and the entries are
duplicated at OSB.This results in entering the same data two times.

4. There could be mismatch of data entered at the branches and at
OSB, resulting in costly correspondence and reconciliation.
If the covering schedule copy from AB is missed in the post, OSB still
receives the credit from the correspondent, and this results in
different in reconciling its account with them.
Covering schedule for sending cheque has to be manually produced.
The cheques pending for realization has to be tailed with account
ledgers jotting down items and reconciling manually.
4. Proposed system for computerization
The bank desires to computerize the process of collecting of foreign cheques.
Design a solution.
5. Required reports
1. Covering schedule for sending cheques to collecting banks.
Model Bank
Address
Date
TO
<collecting bank>
<collecting bank address>
Gentle men:
We enclose <count> cheques aggregating <currency><amount>

5. Please present the cheque to the respect drawee banks for collection and remit
the proceeds to <correspondent Bank name and address> for credit of our
account number <XXXX> with them.
Srno Drawee Cheque No Currency Amont
Bank
Total
2. Report of total cheque sent for Collecting by OSB on a day
This report should be produced ordered Collecting bank wise and Correspondent
bank wise and currency wise, with subtotal for each collecting bank.
Srno Collecting Correspodent Drawee Currency Amount
Bank Bank Bank
Total

6. 3. Report of Realisation
Model Bank
OSB
TO
Model Bank
XXX Branch
The following cheques sent by you for collecting have been realized today
and the proceeds have been credit to the appropriate accounts of
customers.
Your Customer A/c no A/c Fgn Amt Amt Rate of
ref for No ccy realized converted exchange
rupee fro into
fgn rupees
ccy

7. 4. Report of outstanding cheque collections
The report should be split branch-wise
Date of Report:
Date Ref Branch Branch Cheque Currency AMT Collecting Correspodent
no ref no Name No Bank Bank
6. Checks and validations
1. Does the correspondent bank exist?
2. Is the currency of the cheque correct for the correspondent?
3. Is the amount to be converted greater than the cheque amount?