Текст книги "Money, money circulation and credit"

In case of payment of a payment request-order which doesn’t require an acceptance a money sender’s bank has a right to withdraw money from his bank account without acceptance.

In the absence of or lack of required for a payment request-order or a collection order performance sum a money sender’s bank is obliged to maintain records of the accepted by it documents and to keep them till the moment of money receipt on his correspondent account for the following payment or money transfer. Whereby the bank is obliged to pay to a sender a penalty and/or a delay interest in amount stipulated in an agreement between them.

Collection order is a settlement document applied for money withdrawal from the sender’s bank accounts without his agreement in cases stipulated by the legislative acts which is presented on a preprinted set form and either is a collection order of the Department of Revenue Services and the Customs bodies.

On July 1, 2009 the volume of operations performed by means of collection orders in Kazakhstan constituted 0.3 % from the total amount of cashless transactions and 0.5 % by the total volume of payments.

A money claimant presents to a money sender’s bank a collection order with an attachment of the originals of the enforcement orders or decrees issued by the decisions, resolutions, rulings and acts of courts or by the judicatory civil order of money recovery which confirm its reasonability or with an attachment of their copies certified by the court’s seal.

Collection order has a purpose of payment nota bene with a reference to a legislative act stipulating the right of withdrawal (recovery) of money (its date and number) from a sender’s bank account without his agreement.

Collection orders are presented to the sender’s bank in quantity not less than three copies and to the beneficiary bank – not less than four copies.

The sender’s bank accepts the collection orders by means of money sender’s bank account debiting. Whereby the bank transfers money in favor of beneficiary and sends a collection order marked with paid stamp.

The enforcement documents of money withdrawal from the sender’s bank account without his allowance are presented to the sender’s bank within the legislated limitation period. Expiry of this term is the basis for bank refusal to accept a collection order.

Money withdrawal stoppage or stay is performed only:

– by the decision of the authorized government body or public individual who delivered a judgement of money withdrawal;

– on the basis of a corresponding court decision;

– by the law enforcement agencies’ decision on grounds of initiation of criminal case;

– on the basis of the beneficiary’s written direction;

– in other cases as provided for by the legislative acts of the Republic of Kazakhstan.

Listed decisions, regulations, orders or statements are accepted by banks to performance only in case of the date, number, seal impression and public individual’s signature presence.

In the absence or deficiency of enough sum required for collection order performance the receiving bank is obliged to accept and keep received documents in a tickler file till the moment of money proceeds to the bank account.

Accepting the collection orders the receiving bank is obliged not later than the next working day to send a notification to the beneficiary bank of these payment documents receiving in the tickler file excepting the cases when the receiving bank is also a beneficiary bank.

If in the bank accounts of a taxpayer the required sum in tenge is absent the debts recovery of taxes, penalties, fines and delay interests is performed from the bank accounts of foreign currencies on the basis of the tax authorities’ collection orders to these accounts with the usage of set by the National Bank currency exchange rates on the date of payment.

In case of deficiency of the sum required for the Department of Revenue Services’ collecting orders performance the receiving bank is obliged to perform a partial money withdrawal according to the money proceeding by the receiving bank in favor of money sender.

An acceptance of the partially performed collection orders of the Department of Revenue Services is made by stamping «partial pay– ment» on its front. On the back side of all the copies the record of date, sum of partial payment and remaining amount is made. The record is certified by the signatures of the entitled persons of the bank.

The receiving bank performs an accepted collection order of the Department of Revenue Services by means of a payment order issue of the partial payment sum. In the column «purpose of payment» the receiving bank should indicate the requisites of the collection order for the performance of which this payment order is issued.

Under the partial payment of the collection orders the receiving bank makes payment of money proceeding to the sender’s bank account within the transaction day of the receiving bank. The partially paid collection orders are kept in a tickler file till their full payment.

Collection order of the Department of Revenue Services of the creation of tax charges which proceed to the accounts of an outstanding debtor according to their demand to the debtors is sent in four copies to the bank which serves an outstanding debtor.

Such order is registered in a separate book of complaints to the outstanding debtors. In the book the date of collection order receipt, name of issued it tax administration, number of the document, date of issue, sum of debt and the name of outstanding debtor are indicated.

After the full payment of a collection order by an outstanding debtor the second copy is marked with a record under the bank’s officer

signature: «The proceeded sum in tenge___________________ «____ »

__________________ transferred to the budget to the order of the

Department of Revenue Services dated from «__ »_______________

__ No______ .

The copies of a collection order after the payment are distributed by the following way:

– the first copy is placed to the day documents;

– the second copy is sent to a receivable of an outstanding debtor along with his account statement;

– the third copy is sent to the Department of Revenue Services;

– the fourth copy to an outstanding debtor.

Direct debiting of the bank account. Payment by means of direct debiting of the bank account is made on the basis of an agreement between the money sender and his bank according to which the sender agrees with money withdrawal from its bank account on the basis of a beneficiary’s demand for the delivered goods, performed works or rendered services with an attachment of the relevant documents to the mentioned before agreement.

The rights and obligations of the money sender and his bank during the payment under the direct debiting of the bank account appear from the moment of the relevant agreement conclusion.

According to this agreement the bank is obliged to perform the demands of the third persons which are specified to the client’s bank account up to the amount of money and (or) term period, mentioned in the agreement.

Cheques, bills of exchange and plastic cards are not only the instruments of cashless settlements, but also the representatives of credit money (they were already discussed in detail in the theme «Credit money»).

Settlements between the commercial banks are performed only by opening of the correspondent accounts in each of the bank or through the Kazakhstan’s Center of the interbank payments of the National Bank of the Republic of Kazakhstan (KCIP NB RK).

Settlement transactions of the commercial banks of the correspondent accounts (passing KCIP) are based on the correspondent relations establishment appearing between the banks for the mutual performance of the transactions. Banks which establish such relations are called correspondent banks.

Correspondent relations usually are accompanied by the account opening (relations with the account) on the mutual basis (in the each bank) or on an ex parte basis (only in one of the partners as a rule in the big bank). Correspondent account is an account of one bank opened in the other bank where the payments are reflected which were made by the last by means of order and at the expense of the first bank on the basis of concluded between them correspondent agreement.

Either the relations between the correspondents without any account are possible when the mutual settlements are performed via the accounts opened by them in the third loan institution (usually in the big center of the interbank payments).

One more type of correspondent relations is established via the clearing centers where the clearing accounts are opened. Whereby the equal financial claims and liabilities are discharged and the balance is written off (debit) or charged (credit) to the main correspondent account.

The required elements of the business entities activity are the payments and money transfers. Payments excluding their cash forms are made by the second-tier bans. The banks in their turn are connected by the monetary relations with the National Bank. Thus the complicated monetary relations appear between the business entities, second-tier banks and National Bank. The mechanism which allows realizing these relations and includes the complex of hardware and software is called payment service.

The efficiency and fast operation of the payment transactions and payment service are the first-order conditions of the commodity and financial markets functioning success. From the speed of money transfer depends the stability of the financial condition of each business process participant, treasury revenues and accordingly economic and political stability of the State in whole.

The works on automatic paying systems creation in Kazakhstan began from July of 1993 from the KUBAZH system implementation in the National Bank which was intended for the bank information processing automation covering all the National Bank activities and supporting settlements between them. From 1993 till 2003 four versions of this system were developed and implemented.

In 1995 the first in Kazakhstan clearing organization (the Almaty clearing housing) was established in the National Bank which worked on the method of multifeature mutual settlement. The banks made final settlements once in the end of a transaction day by net position of each participant. That time there were no «electronic documents» and the clearing member banks had to make an exchange of payment orders in hard copies in the end of the day.

Gradually in the National Bank regional branches the clearing houses were established which performed the interbank clearing of the intraregional payments.

In 1996 the meaning of «electronic payment order» was normatively fixed and the formats of electronic messages were developed and implemented for the information exchange about the payments between the payment service participants which were oriented on SWIFT.

This predetermined the single payment service establishment in the Republic. As a result the Almaty clearing housing was reorganized into the Kazakhstan center of interbank settlements (KCIS) which was provided with all the outlying from the central bank functions of settlements organization throughout the country.

One of the most important events in the payment service of Kazakhstan development became in August of 1996 the creation of the gross settlement system (GSS) on the basis of KCIS processing the electronic payment orders and performing the settlements on gross basis.

For money transfers GSS used the correspondent accounts of the participants. From December of 2000 the system was reorganized into the interbank system of money transfers (ISMT).

Nowadays the Kazakhstan center of interbank settlements (KCIS) is the operator of payment services the system of which includes the interbank system of money transfers (ISMT) and the automated system of retail payments (SRP). These systems provide the urgent and faultless performance of the interbank settlements in electronic format, lead the correspondent accounts of the second-tier banks and all the financial organizations rendering the separate types of bank servicing.

In whole via the payment service of Kazakhstan (the interbank system of money transfers and the system of interbank clearing) in 2008 24.4 billion transactions in amount of 141 853.3 billion tenge (or 1 179.2 billion US dollars) were held. Against 2007 the quantity of payments in the payment service increased on 3.6 % (on 844.2 thousand transactions) under the amount of payments decrease on 1.1 % (on 1 601.1 billion tenge).

Interbank system of money transfers (ISMT) is the gross settlement system in real-time mode which performs the money transfers on the accounts of ISMT users in the National Bank of Kazakhstan. The gross settlement system implies the money transfers of the each individually processed payment document. Whereby the transfer passes in the limits of available sender’s means.

In case of money lack the payment messages are placed into the queue till the moment of receipt of monetary funds. The conclusion of payment happens on the same day. By means of ISMT the gross and high-priority settlements are made. The gross settlements system provides banks with an irrevocable and final execution of settlements. The sum of one payment in ISMT is not limited.

System functioning. Using the specialized terminals the participants directly send the payment orders to the system. The sent to the ISMT payment orders should be only electronic. Using SWIFT the ISMT provides the payment service participants with all the types of communication channels: communal, dedicated lines, Internet, X.25, DialNet and the user is free to choose the channel himself.

Here happens the division of responsibility between the NB RK, the ISMT and the rest users of the system. Whereby the NB guarantees that net settlements of the users in the ISMT will be reflected in the account books of the NB RK in the end of transaction day.

ISMT is responsible for the settlements processing received from the system’s users and for the money transfer from one user to another. The users are responsible for the electronic payment documents correctness and truthfulness.

In case of money lack in the bank for the settlements performance the possibility of overdraft (credit) receipt from the National bank in the ISMT is provided. The basic terms of overdraft are the following: the credit is provided to the bank within the set limit; term of payment – within the transaction day but not later than 18.00.

In case the overdraft stays uncovered till 18.00 its cost is reorganized to credit overnight on the respective conditions which should be paid till 15.00 of the next day.

If the liability to the National Bank stays uncovered thus it has a right to block a bank account and recover the required sum for the overnignt credit and interests payment.

Transaction day in the ISMT begins at 08.00 and finishes at 20.00. In the transaction day closure the payment orders which stayed in a queue by the reason of strain on liquidity on the ISMT user’s account are canceled and in this case the user receives a notification.

From this point of view the ISMT could be characterized as a prepaid system. Unlike the correspondent accounts the funds deposited in the ISMT accounts couldn’t be blocked by the National Bank.

The cost of services in the ISMT changes depending on the time of payment performance and applied as a stimulating mechanism for the effective process of the payments performance.

As was mentioned before the ISMT makes settlements in realtime mode (RTGS). For any country the RTGS system has a highest priority in the financial sphere. This system presence characterizes the stable functioning of the state bank system.

In 2008 via the ISMT 9.6 million transactions on amount of 139 558.5 billion tenge (1 160.1 billion US dollars) were conducted. Against 2007 the quantity of payments increased on 12.8 % (on 1 087.2 thousand transactions) and the amount of payments decreased on 1.1 % (on 1 590.0 billion tenge).

In average for the day via the ISMT in 2008 38.5 thousand transactions passed on amount of 560.5 billion tenge that is higher the level of 2007 in quantity on 4.5 thousand transactions (on 13.2 %) and lower in amount on 4.1 billion tenge (on 0.7 %). Whereby the average sum of one payment document in the ISMT in 2008 was 14.5 million tenge and decreased against 2007 on 12.3 % (on 2.0 million tenge).

According to the main intension the ISMT users send to the system basically gross and urgent payments of the financial sector transactions. Thus in 2008 usually via the ISMT the settlements of operations with foreign currencies and precious metals performed (21.5 % from the total volume of payments of the ISMT) with the paper holdings of the Kazakhstan residents (29.4 %) and also with the interbank deposits and transfers of the own banks’ and their clients’ funds (24.7 %).

Whereby via this system-relevant payment service ofthe country in 2008 98.4 % were processed from the total volume of wire transfers in the country and 39.3 % from the total volume of all the payments what shows the ISMT’s important role of the gross and urgent payments.

The quantity of ISMT users on January 1, 2009 amounted 51 including 36 second-tier banks and the Development Bank of Kazakhstan JSC, the Treasury Committee of the Ministry of Finance of RK, six organizations which perform the separate types of bank operations (Kazpost JSC, the Kazakhstani Mortgage Company JSC, the Central Securities Depository JSC, the Kazakhstan Stock Exchange JSC, the Financial Industrial Company TIMEY LLP, the clearing organization of the KCIS); three accounts for the State Center for Pension Payment; the Interstate Bank and the Eurasian Development Bank; the National Bank of RK and the custodian bank of the State Pension Savings Fund (UUMO NBCH).

System of retail payments (SRP). The mechanism of work of the SRP is based on the clearing settlement system. In Kazakhstan the functions of clearing organization performs the Kazakhstan’s Center for Interbank Settlements licensed by the National Bank of RK. This is so called net settlement system which doesn’t require the advance money reservation.

Money is required on the moment of final settlement in amount of formed net cash debit balance. The payment system based on net settlements under the banks’ payments and transfers performance allows accepting the received payment messages by the system 24 hours a day.

The payment documents acceptance finishes in the end of transaction day and the banks’ offsetting of counter-claims and obligations is performed and the net position settlement of each user thereafter following the results of settlements the money transfer to the ISMT occurs.

In the quality of clearing system the SRP needs the funds required only for the net position coverage in the end of transaction day. The net positions calculation of the SRP participants is lead by KCIS after 15.00. After that the net positions are sent and settled via the ISMT.

After the money transfer conclusion according to the results of clearing the KCIS sends to a participant a notification of the money transfer conclusion according to the net position of this participant.

If the ISMT basically performs the settlements on large amounts but the SRP has a limitation on a maximum sum of one payment of three million tenge. The SRP uses only credit transfers. All the payments submitted to the system are not final and could be recalled by the money sender within the transaction day.

For this system users the services are cheaper (9-22 tenge for one payment order) unlike the ISMT services. The positive moment of the clearing system is the possibility to work with the date of valuation (the payments formation with the date of settlement on three days ahead). The electronic clearing system serves all the regions and financial institutes of Kazakhstan.

In the modern conditions the banks, business entities and population are provided with a wide range of payment means (payment instruments) in compliance with the terms of obligations fulfillment, bank services costs, and regional and industry characteristics. For this purpose the laws and regulations of the National Bank of RK are developed and constantly improve which regulates issue and circulation of the cheques, bills of exchange, payment cards, documentary letters of credit, direct debiting order of the bank account, payments performance without the bank account opening.

In the sphere of retail payments the payment orders are the most widely spread mean of payment in Kazakhstan. The debit payment instruments such as cheques and direct debiting are not very popular. The sphere of payment cards including credit and debit cards conquers a market progressively.

As on January 1, 2009 in the system of interbank clearing the quantity of participants amounted 36, where 29 were the second-tier banks, the Treasury Committee of the Ministry of Finance of RK, the National Bank, the custodian bank of the SNPF (UUMO NBCH Custodian), three accounts for the State Center for Pension Payment, Kazpost JSC.

In 2008 the retail payment flows constituted 14.8 million documents on amount of 2 294.8 billion tenge (19.1 billion US dollars). Against 2007 the quantity of documents in the clearing system decreased on 1.6 % (on 243.0 thousand documents), whereby the sum of payments decreased on 0.5 % (on 11.1 billion tenge).

In average for the day through the clearing system in 2008 passed 59.6 thousand documents in amount of 9.2 billion tenge what is less the level of 2007 in quantity of payments on 0.7 thousand transactions (on 1.2 %) and in amount of payments on 7.5 million tenge (on 0.1 %). Whereby the average sum of one payment in the interbank clearing system constituted 154.6 thousand tenge what in comparison with 2007 is more on 1.1 % (1.8 thousand tenge).

In the clearing system the biggest share of payments in 2008 fell on the payments in favor of budget (payment of taxes and other obligatory payments) and the payments at the expense of budget (share in the total volume of payments in the system constituted 27.9 %) and the payments of business entities as per settlements for the commodities and non-inventory properties (share – 29.0 %) and for the rendered services (25.8 %).

At the same time in the system of interbank clearing intended for making payments which are not of high-priority and not exceeding 5 million tenge 60.7 % from the total quantity of cashless settlements were made and 1.6 % from their total amount that also shows the clearing system’s intension of a considerable quantity of small payments making.

In the Republic of Kazakhstan the main organ which regulates the payment service is the National Bank of the country the role of which is determined in the Law «About the National Bank of the Republic of Kazakhstan)).

The National Bank in the quality of the Central Bank determines the order, system and form of making payments and money transfers in Kazakhstan, organizes the payment service functioning. The Law «About the banks and bank activity) and other legal acts regulate the second-tier banks’ work which participate in the payment service and the securities settlement system.

The main legal act regulating the relations under the payments and money transfers making in RK is the Law «About the payments and money transfers) dated from June 29, 1998.

The types, handling and operating procedures of the payment documents under the cashless payments and money transfers, rights, obligations and responsibilities of the payments’ and money transfers’ participants determine «The rules of payment documents application and cashless payments and money transfers making on the territory of the Republic of Kazakhstan).

The services of cashless money transfers rendered by the Kazakhstan’s Center for Interbank Settlements are regulated by «The rule of money transfers in the interbank system of money transfers) and «The rules of clearing making in the Republic of Kazakhstan).

The comprehension questions

1. Explore the meaning of cash turnover.

2. What is money circulation?

3. What payments are made via the system of the ISMT (interbank system of money transfers)?

4. Describe the mechanism of work of the SRP (system of retail payments).

5. What main types of cashless settlements are used in the economic relations in the country, why?