Automated Clearing House

The backbone of interbank payments

A 24/7 clearing infrastructure that enables direct debit and direct credit transactions between all financial institutions, processed in a secure, straight-through manner with full regulatory oversight.

Successfully implemented at Nepal Clearing House Limited (NCHL)

How the Automated Clearing House works

An Automated Clearing House is a centralized electronic network that processes batches of direct debit and direct credit payment transactions between financial institutions. It acts as the intermediary between the originating bank (the institution that initiates the payment) and the receiving bank (the institution that receives the funds).

The ACH system operates on a session-based clearing model, processing transactions in defined cycles throughout the day. Each session collects submitted payment instructions from participating institutions, validates them against established rules and limits, calculates the net clearing positions for every participant, and posts the resulting settlement figures to their accounts at the central bank through the RTGS system.

This end-to-end process eliminates the need for physical movement of payment instruments between banks. Transactions that previously required manual handling, courier services, and days of processing are completed electronically within a single clearing session, reducing operational overhead for every institution in the network.

End-to-End Clearing

The full clearing cycle from payment initiation at the originating institution through validation, netting, and final posting to the receiving institution's account. Every step is automated and auditable.

24/7 Operations

The system runs around the clock with configurable clearing sessions for normal business days, weekends, and exceptional scenarios. The regulatory body can adjust session schedules dynamically to accommodate incidents or market demands.

Mandate Management

A built-in module for verification and management of standing mandates across all participant institutions, covering recurring payments such as utility bills, loan installments, insurance premiums, and salary disbursements.

RTGS Integration

Net clearing positions are automatically posted to participant settlement accounts through the Real-Time Gross Settlement system at the central bank. When a clearing session closes, settlement happens without manual intervention.

Participant Management

Full lifecycle management of participating institutions including onboarding, status changes, suspension, and removal. Supports direct participants, indirect participants, technical participants, and sub-participants within the network.

Multicurrency Support

The system supports multiple currencies with dedicated clearing sessions for each. New currencies can be added through parametric configuration as the country's payment landscape evolves and cross-border corridors expand.

For the Public

Faster, cheaper, more accessible payments

Salary payments, pensions, and government disbursements arrive faster without delays from manual processing
Utility bills, loan repayments, and recurring subscriptions are automated, reducing the risk of missed payments
Lower transaction fees compared to traditional paper-based transfers, making banking more affordable for everyone
Electronic records create a transparent audit trail for every payment, improving personal financial management

For Banks

Operational efficiency and reduced costs

Eliminates manual processing of interbank payments, freeing staff to focus on higher-value activities
Straight-through processing reduces errors and the operational cost of exception handling and reconciliation
New revenue opportunities through value-added services like bulk payment processing for corporate clients
Real-time visibility into clearing positions and transaction status improves liquidity management and decision-making

For the Central Bank and Government

Oversight, control, and financial inclusion

Complete regulatory oversight with full management over participant institutions, session schedules, and risk parameters
Debit cap management and real-time monitoring reduce systemic settlement risk across the entire financial network
Drives financial inclusion by making electronic payments accessible to institutions and populations across the country
Reduces paper-based payment processing, supporting both environmental sustainability and modernization goals

Live Implementation

Deployed at Nepal Clearing House Limited

I-Solutions, in partnership with ProgressSoft Corporation, successfully implemented the Automated Clearing House system at NCHL. The platform is now used by all banks and financial institutions in Nepal for interbank direct debit and direct credit clearing, processing transactions nationwide on a daily basis. The implementation was delivered within timeline and budget, and the system continues to operate with full reliability.

Frequently asked questions

Common questions from central banks, regulators, and financial institutions evaluating or operating an ACH system.

The system processes both direct credit transactions (where the originating institution pushes funds to the receiving institution) and direct debit transactions (where the originating institution pulls funds based on a pre-authorized mandate). This covers salary payments, pension disbursements, utility bill collections, loan repayments, insurance premiums, government transfers, and any recurring or one-time interbank payment.

At the close of each clearing session, the ACH calculates the net clearing position for every participant and automatically posts these figures to their settlement accounts through the RTGS system at the central bank. This integration is seamless and requires no manual intervention, ensuring that settlement happens reliably after every session without delays.

The regulator has comprehensive management capabilities including participant onboarding and status control, session scheduling, debit cap and item limit configuration, billing and penalty management, and full audit visibility over every transaction. These controls are parameterized, meaning the regulator can adjust risk thresholds, processing rules, and operational schedules without requiring system changes.

The ACH is designed for high scalability, supporting the addition of new participant institutions, new currencies, and increasing transaction volumes without architectural changes. The parametric design means that onboarding a new bank or adding support for a new currency is a configuration task, not a development project. The system in Nepal currently handles all banks and financial institutions in the country.

The system monitors each participant's debit exposure in real time against their configured limits. When a participant approaches their cap, the regulatory body receives an alert. Transactions that would exceed the limit are held or rejected according to the rules defined by the regulator. This mechanism is essential for mitigating settlement failure risk and ensuring the stability of the clearing network.

Interested in ACH implementation?

Whether you are a central bank exploring payment infrastructure modernization or a financial institution looking to understand integration requirements, our team has the experience to guide you.

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