Clearing Association of Bankers

1. Clearing Association of Bankers January 2009

2. We are pleased to announce the formation of CLEARING ASSOCIATION OF BANKERS with the objective of promoting goodwill, understanding & fellowship among the bankers engaged in clearing. This news letter is published to update staff in latest trends and developments and help them to overcome difficulties encountered when performing day to day functions in connection with clearing operations.

3. INNAUGERATION DAY …. Mr. Priyantha Fernando Deputy Governor Central Bank was the chief guest and Mrs. Rose Siriwardena Director Payment & Settlement Department was the guest of honor.

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10. Sri Lanka Common Payment Switch – A New Milestone in the Payment Systems Sunimal Weerasooriya General Manager/CEO - LankaClear (Pvt.) Ltd. Background Over the years payment systems have evolved from the barter system to currency and cheques and more recently to electronic payments. Advances in the area of Information Technology have resulted in the development of new electronic payment instruments. The migration from paper based payment instruments to electronic payment instruments has resulted in lower costs of payments as well as high efficiency levels. Whilst customers would always seek the most efficient and cost effective payment method, the providers of payment services would seek the most profitable payment system. High liquidity, secure transactions and instant payment realization in the payment and settlement system is essential in order to fast track economic development in a country and to enhance economic activity.

11. Common Payment Switch (CPS) With the goal of Sri Lanka becoming a regional financial hub, the National Payment Council (NPC) together with Central Bank of Sri Lanka (CBSL) and LankaClear (LCPL) is in the process of launching a Common Payment Switch to enable online, real time secure and reliable fund transfers for low value interbank payments. In the Phase I of the implementation the CPS will facilitate the following transactions. • Statutory payments • Inward remmittances • Local credit card transactions • Third party A/C to A/C transfers • Salary transfers • Bill payments • Direct Debit transactions

12. Common Payment Switch (CPS) (cont…) In the 2nd Phase the CPS would facilitate the following types of transactions: • PIN based transactions • Electronic Cheque transactions

13. Benefits to Banks The CPS will benefit the participating Banks in 4 major areas: Higher operational efficiencies in fund transfers for payments With the facility of online, real-time transactions through the Switch and the ability for the customer to initiate transactions through multiple modes such as Internet banking, ATMs, Phone Banking etc., the operational efficiencies would greatly increase. Greater revenue generating capabilities The Banks would have the option of creating new products and also to increase the volumes of the existing products, which will significantly increase the “Top Line” and the “Bottom Line”.

14. Benefits to Banks (cont…) Cost Savings The Banks could lower the operational overheads by eliminating the manual work involved and also moving away from the “brick & mortar” model and facilitating customers to initiate payment transactions without walking into the Bank Branch. Integration of various banking systems With the Hi-Tech capabilities of the CPS, the banks would be able to integrate most of the banking systems to the Switch. Since the CPS would be the backbone for all electronic fund transfers, the banks would get a future proofed online, real time payment system for a very low Total Cost of Ownership (TCO).

15. Benefits to Bank Customers • Some of the main benefits to the bank customers will be: • Capability of online real-time transactions between any bank branch in Sri Lanka, multiple access points to the system (i.e. ATMs, Internet Banking, Phone Banking etc.) and the 24 * 7 access to the system. • Sri Lanka has a very technically savvy community as evident from the mobile and sms penetration in all demographics of the country and as well as the usage of the mobile payments in the rural areas. • With such a customer base, it is expected that the introduction of the CPS would create an explosion of the usage of services offered.

16. Benefits to the Country • Some of the main benefits this nationwide system will bring to the Sri Lanka’s economy would be the higher liquidity in the payments and settlements system and inducing of economic activity and growth. • The CPS framework will create the infrastructure required for a payment super highway in Sri Lanka to enable future development in the banking sector.

17. Road Map The implementation of the CPS started in November 2008 and the pilot runs with the initial set of banks joining in the pilot stage and the User Acceptance Tests would be completed in February 2009. The live runs with the pilot stage banks would commence on 1st April 2009 and it is expected that most banks would join the system by June 2009.

18. CLEARING  ASSOCIATION  OF  BANKERS No.110, Sir James Peiris Mawatha, Colombo 02. Tele : 4730575, 5331460      Fax  : 4712006 e-mail address : clearingassociation@gmail.com • President- Mr. HalinHettigoda • Vice President- Mr. Kenneth Nugegoda • Secretary- Mr. Joy de Silva                                 • Asst Secretary- Mr. K. Balachandrarajan • Treasurer- Mr. P S Nilaweera • Asst Treasurer- Mrs. L A S Samarawickrema • Social Secretary- Mr. NishanthaJayawardene • Committee Members • Mr. RohanSamarasundera • Mr. IsuruJayaweera • Mr. Esala Silva                                 • Auditors • Mr. DeepalSirisena • Mr. SohanGoonewardene

19. Contact Info