1.1 Introduction
Automatic Cheque Processing is one of the most widely researched areas in document analysis and biometric. Various methodologies have been proposed in this area for Automatic Cheque Processing and forgery detection. An account holder gives cheques to another person as account payee or self-cheque. The widespread use of bank cheques in daily life makes the development of cheque processing systems of fundamental relevance to banks and other financial institutions. Bank transactions involving cheques are still increasing throughout the world in spite of the overall rapid emergence of electronic payments by credit cards. Automatic bank cheque processing systems are hence needed not only to counter the growing cheque fraud menace but also to improve productivity and allow for advanced customer services. The automatic processing of a bank cheque involves extraction and recognition of handwritten or user entered information from different data fields on the cheque such as courtesy amount, legal amount, date, payee and signature.
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Limitations of the Study and Definition of technical terms.
1.2 Background of Study
The cheque clearing system is the means whereby bank exchange cheque drawn through clearing system. Clearing system on the other hand is the medium through which proceeds of cheques and other payment instrument are transferred from the paying bank to collecting bank. The Nigerian automated clearing system (NACS) which book-off on October 21, 2002 as a result of the time function that affects clearing system i.e before cheque is cleared. It involved much stretch in which cheque is not cleared at when needed.
The Central bank of Nigeria (CBN) act No 24 of 1991 empowers the apex bank to facilitating the clearing of cheque and other payment instruments. As a movement forward on the execution of the mandate (CBN) issued the Nigeria banker’s clearing house rule on January 2, 1995. In November 1995 (CBN) governor announced a plan for a dratie overall of the clearing system monetary transaction in Nigeria were largely based on cash and as such had inherent problems, such as security volume of paper its transport, currency sorting changing.
This state of affair creates the moving member of the public to non − cash payment instruments was hampered by the clearing processes, which was largely manual, the services to the customer was prior and cheque based on transaction were use prone to fraud “the clearing circle look between 5 to 15 working days.
The clearing process was very rowdy with too many banks participating on clearing. The process was frequently late in balancing the book and prone to human awor. This made it very difficult for central bank of Nigeria (CBN) to calculate and advise on the net settlement figures on time after the days clearing. Although many of the instrument had magnetic character recognition (MICR) code them the lack of automated meant that MIC code lines and infrastructure would not be used.
This meant a waste of consideration investment made in the form of magnetic link character recognition (MIRC) code line information processing infrastructure to fund solution to the problems a committee was set-up its report formed the basis of the banker’s committee decision on June 16, 1996 which approved the automated of the clearing process to more zone within the country with Lagos having more zones” reduce the number of clearing days to buster consumer confidence and encourage. The uses of non cash instrument also reduce number of clearing bank to make the process number of clearing bank to make the process more manageable, faster it was reasoned that automated would make used of [MICR] technology possible, which would further bring speed and efficiency into clearing processing with the potential to reduce the clearing float that introduce networking between the parties involved in clearing these was expected in unlock the benefit of electronic banking for Nigerians.
The system that is able to read cheque automatically would be very helpful, especially if it is fast and accurate. Even if misclassification occurs, the mistake could potentially be detected during the recognition process; however it is more desirable that the system rejects a cheque in case of doubt so that it can be directed to manual processing from the beginning. In order to produce a successful cheque processing system, many sub-problems have to be solved such as background and noise removal, recognition of the immense styles of handwriting and signatures, touching and overlapping data in various fields of information and errors in the recognition techniques (Vamsi et al., 2005).
1.3 Statement of Problem
Investigation revealed that most customers’ rough handle (twist or fold) cheques issued to them from other banks which become difficult to scan and as a result needs to be cleared manually which is costly and time consuming on the part of the bank. The problem of this study is to found out empirical analysis basically on applied research aimed at solving the immediate practical problems in the banking system.
1.4 Aim and Objectives of the Study
The aim of the study is to design and implement an Automated Cheque Clearing System. In achieving this aim, the following specific objectives were laid out as follows to develop an application software that will:
- Access the significance of automated cheque clearing system.
- Make the process of cheque clearing faster and efficient.
- Reduce the number of cheque clearing days, so that consumers will have the confidence and courage of the uses of non-instrument.
- Eliminate identity difficulties and encourage development and integration of other electronic payment and settlement product.
1.5 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- Is automated cheque clearing system significant?
- Can the process of cheque clearing be faster and efficient?
- How can the number of cheque clearing days be cut down?
- How can identity difficulty be eliminated to encourage development and integration of other electronic payment and settlement product?
1.6 Research Hypothesis
In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.
Hypothesis One
- H0: Automated cheque clearing system is not significant.
- H1: Automated cheque clearing system is significant.
1.7 Significance of Study
This study has important value to the academic it helps the student of Banking and Finance, Business Administration, Marketing, and Economics in our various institutions to have knowledge about the automated clearing system as part of their course or study when they get to the field so that it would not be strangled to them.
Community: It helps people in community especially those who enjoy banking services by providing quick and faster service for them for instance when a cross cheque is drawn to any bank, the customer of collecting bank enjoy quick and faster payment.
Society: The introduction of (ACS) growth and economy development in which society are the beneficiary.
1.8 Scope of Study
The scope of the research is focused on automation of cheque clearing system using First Bank PLC in Nigeria as a case study.
1.9 Limitations of the Study
During the course of this study, many things militated against its completion, some of which are:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Establishment Policies: Establishment policies posed a serious limitation as most staffs are not ready to release information needed for this project work. There were lots of information needed from the staffs of this institution to enhance the study which took them time to release or they did not release at all for security purposes, hence the scope was reduced.
- Research material: availability of research material is a major setback to the scope of the study.
- Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet).
1.10 Definition of Terms
Cheque Clearing System: Is the process of moving a cheque from the bank in which it was deposited to the bank on which it was drawn, and the movement of the money in the opposite direction.
