An Overview on

Bangladesh Electronic Funds Transfer Network

Deptt. Of Currency Mgt. and Payment Systems Bangladesh Bank Head Office Dhaka

Discussion Points
History of EFT What is BEFTN

Participants in the BEFTN

EFT Information Flow EFT Transactions types

Worldwide use of EFT and Cheque

Processing cost for different types of

payments Advantages of EFT Legal Framework

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History of EFT

SCOPE (Special Committee of Paperless Entries) was formed in 1970 in the USA. The first Automated Clearing House (ACH) Association was formed in 1972. In 1974 NACHA (National Automated Clearing House Association) was formed. In 1978 with the joint effort of FED and NACHA the regional ACH networks were inter connected.

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What is BEFTN
Bangladesh Electronic Funds Transfer Network, BEFTN is a highly reliable and efficient nationwide batch-oriented funds transfer system, which provides for the inter bank payment and settlement of electronic debits and credits. Features of EFT
End

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to end electronic (required no instrument). EFT transaction may both be debit or credit.

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Participants in BEFTN
The Originator The Originating Bank (OB) The EFT Operator (BEFTN, Bangladesh

Bank) The Receiving Bank (RB) The Receiver

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Information Flow in BEFTN

Origination Bank

BEFTN

Receiving Bank

BB
For settlement

Authorization (for debits) Originator

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Receiver

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EFT Transactions

An EFT entry may either be a credit or a debit. What happens to the receivers account will determine whether it is a debit or a credit entry.

If the receivers account is debited, then the entry is an EFT debit and if the receivers account is credited, then the entry is an EFT credit.

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EFT Credit Entries

In EFT credit transfers (which is also termed as credit push), the Originator instructs his/her/its bank to debit his/her/its account and transfer the funds to the Receivers account. Examples Payroll Corporate and Govt. Dividend, Interest and Refund Payments Inward Foreign Remittances Tax Payments Customer initiated transactions (online purchase)
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EFT Debit Entries

In EFT debits (also termed as debit pull), the Originator instruct his/her/its bank to collect payment from the Receiver, often on a recurring basis.

Examples
Utility Bill Payments Mortgage/Loan Installment (EMI) Insurance Premium Club/Association Payments
( The rules requires consumers to authorize once for debit payments and . . . . also gives them the right to reverse the transaction for a set period of time.)
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Per capita use of EFT and Cheques

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Processing cost for different payments

Cheques & other paper

based payments are expensive and have increasing fraud risk.

Electronic payments are

more secure and timely/ predictable.

Typical electronic
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transactions cost much less to process

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EFT Advantages Contd..

Advantage to Consumers

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Elimination of time and cost in depositing cheques Consistent availability of funds on a timely basis Elimination of possibility of loss or stolen cheque
Reduction of clerical cost for cheque issuance/cash disbursement and reconciliation Elimination of time lost by employees in depositing cheque Eliminate cheque procurement costs Better cash management/forecasting
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Advantage to Companies

EFT Advantages contd..

Advantage to the Participating Banks Reduction of costs through automated processing New opportunities for increased business : New products Alleviation of teller-line congestion during peak periods Ability to offer improved service Public recognition through effective, efficient and innovative payment services.
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Legal Framework
The EFT process operates from beginning to end

through a series of legal agreement. The participating banks has signed agreement with Bangladesh Bank which bound them to EFT Rules. Before any transaction is initiated, the Originator and Originating Bank execute an agreement, which among other things, bind the Originator to the BEFTN Operating Rules.
BEFTN Operatingh Rules define the parameters of the

relationship between the two parties, and identify processing requirements for specific application(s), and 14 establish liability and accountability for procedures 28/09/2011

Q and A ?

Thank You
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