KARACHI, July 26: The State Bank of Pakistan on Thursday said that the Real Time Gross Settlement (RTGS) system would be implemented from August 15, 2007.

The central bank in a circular issued here stated that the system was being implemented to automate inter-bank funds transfer and securities settlement on real time basis.

“In this connection country wide netting of clearing results is one of the prerequisites for smooth functioning of the proposed RTGS system for which a detailed scheme has already been finalised,” the SBP circular said.

It said after implementation of this system the local SBP offices and main branches of commercial banks in different cities would get the same set of reports as was being done currently for control and reconciliation purposes.There will be no change in the clearing procedure, reporting and functions. The new system will have no effect at branch level. Only the inter-city cycle will become a two-day product from existing three-day cycle, the central bank said.

“In essence this transition will be transparent to the commercial banks and there will be no change in procedure, reporting and functions currently being followed at banks’ branch level”.

But there will be a change in the accounting procedure at main branch level for the clearing related transactions in all cities i.e. currently the main branches in each city reconciles their clearing related transactions with SBP-BSC office of the same city, the circular further said.

The country wide composite nets will be debited or credited to the bank’s current account in the books of SBP-BSC Karachi, therefore, the main Branch at each city will reconcile their clearing related transaction with their main branch Karachi, it elaborated.

“The scheme will be implemented product wise i.e. at first instance SBP would implement country wide netting of Normal Clearing–Inward and Normal Clearing–Return only from August 15, 2007 for two weeks and after its successful implementation, the other two products viz. Same Day Clearing and Intercity Clearing will be implemented afterwards,” the SBP said.

Banks are advised to plan, streamline the flow of accounting transactions in this respect and communicate the same to all main branches and also inform SBP about the preparedness at least before August 10, the circular added.