Instrument Liquidation Process Flow
Instrument can be liquidated to own bank account, or can be received as part of local clearing.
- On initiating the instrument liquidation, the following processing steps are followed by the system:
- Initial Validations: System should perform mandatory field checks and reference information checks. System validates whether account record is open and authorized.
- Instrument Validation: Instrument status should be ‘Active’. It should not be in any other status for example, liquidated, cancelled, and stale or payment stopped. If a valid Instrument is found, instrument details currency, amount and issue date are matched with instrument issue record. If the instrument is payable by a particular branch, then the liquidation can be initiated by that branch only.
Note:
For instrument liquidations initiated from user interface, system throws an error for any validation exception. - Sanction Check: If Sanction screening is required for instrument payment, then it should be possible to send the clearing party details to the external sanction system for verification.
- Exchange Rate Pickup: Based on instrument currency and credit account currency exchange rate is picked up.This can be internal/external rate.
- External Account Check: If the instrument is getting credited to an account with the same bank, credit account status check to be done with DDA system. This processing step is not applicable for GLs.
- Accounting Handoff: Accounting entries are handed off to external accounting system.
Parent topic: Instrument Transactions