Legal Basis Rule XVIII on Clearing and Operation of Settlement Accounts Authorized under Section 6 of Regulation 1999/20 Whereas under Section 5 of Regulation No. 1999/20 on the Banking and Payments Authority of Kosovo (hereafter: the Regulation) one of the principal objectives of the Banking and Payments Authority of Kosovo (hereafter: BPK) is to foster an efficient and safe system for domestic payments; Whereas under Section 6 of the Regulation the BPK has the specific powers to formulate and implement measures for and supervise and regulate payments and settlement systems for transactions in domestic and foreign currency in Kosovo, to own and operate one or more systems, and to hold foreign currency deposits for banks; Whereas under Section 39 of the Regulation the BPK may organize, own, operate, supervise and regulate systems for payment orders and for clearance and settlement of interbank payments, in currencies it determines, whether or not legal tender, and shall establish such procedures and issue such rules and orders relating thereto as it shall deem appropriate; Whereas under Section 11 of the Regulation the BPK may open accounts on its books on behalf of banks lawfully operating in Kosovo; Whereas under Section 40 of the Regulation each bank operating in Kosovo that wishes to participate in a payment, clearing or settlement system shall open and maintain an account on the books of the BPK, on such terms and conditions as the BPK shall specify, and shall provide promptly as required by the BPK such information concerning its operations and financial conditions as the BPK shall prescribe by rule; Whereas under Section 4 of the Regulation the BPK shall enjoy operational and administrative autonomy and exercise all powers specifically granted by the Regulation and other applicable laws and regulations and such incidental powers as shall be reasonably necessary out to carry out powers so granted; Whereas under Section 62 of the Regulation the BPK is empowered to issue such rules, orders and guidelines as the BPK shall deem necessary or advisable to give effect to the provisions of the Regulation; Whereas under Section 17 of the Regulation the Governing Board of the BPK has the power to adopt all rules, orders and guidelines issued by the BPK; And whereas under Section 2 of the Regulation rule means an obligatory directive issued by the implementation of the Regulation to all banks and financial institutions;
The BPK issues the following Rule on the domestic clearing of payment orders denominated in DM given by banks and the opening and operation by banks of DM settlement accounts with the BPK: In this Rule: Part 1 Definitions Bank means any legal entity that is engaged in the business of banking either under authority given under banking license issued by the BPK or established by law as bank and includes its branch network; Banking day means a day or it s part during which the bank is open for the receipt, processing, transmittal, of payment orders and other messages relating to payment transactions; Bilateral bank payment means a payment from one bank to another; BPK means the Banking and Payments Authority of Kosovo established under UNMIK Regulation No. 1999/20 on the Banking and Payments Authority of Kosovo; Clearing means the exchanging and processing interbank payment orders; DM means German Mark. Order means an obligatory directive issued by the BPK in implementation of the Regulation and this Rule. Operating Procedure an means obligatory directive issued by the BPK in the implementation of this Rule; Payment order means an unconditional instruction to carry out a payment transaction denominated in DM given by a customer or a bank; Payment transaction means a transfer of DM funds from a payer s account either to the payee s account or otherwise to the payee s hands, originated by a payment order, and includes the withdrawal of cash from a settlement account. The payer and payee in a payment transaction may be the same or two different individuals or legal entities; Settlement Account means the DM account that a bank opened and maintains on the books of the BPK for the settlement of payment transactions; Settlement means the process of payment out of or into a settlement account;
Single bank payment means a payment between a bank and the BPK; and Third-party processor means a provider of a facility for the communication of payment orders on behalf of banks. Value date, means the banking day on which a payment order is to be acted on as instructed by its sender. Part 2 Scope and Application (a) A clearing and settlement is to take place on each banking day in Kosovo for the exchange of payment orders relating to single and bilateral bank payments (b) To take part in the clearing and settlement, an interbank payment order will reflect a payment transaction on behalf of a customer or participating bank. A payment order submitted by a customer directly to a third-party processor as instructed by its bank is deemed to be the bank s own payment order carrying out the customer s instructions. (c) Participants in the clearing and settlements are banks. The interbank settlement of the clearing takes place on banks settlement accounts maintained on the BPK. (d) Banks are bound by this rule and any operating procedure and orders issued thereunder, and are subject to a disciplinary action, including suspension, by the BPK, for any violation.
Part 3 Payment Orders (a) To be included in the clearing and settlement, each payment order must either for a single or bilateral bank payment out of and/or into a settlement account. The payment order must contain an irrevocable and unconditional instruction for a payment in DM, and not be subject to any restriction or limitation, except that it may be value-dated as prescribed in an operating procedure. It must comply with specifications prescribed in operating procedures and addressed either to a bank or to the BPK. (b) Subject to the provisions of this Rule, a payment order which complies with subsection (a) will be executed by the BPK by posting a debit and/or credit to a settlement account(s). Each payment order which does not comply with subsection (i), or that cannot be directed due to insufficient or incorrect data, authentication failure or any other reason, and each payment order which was wrongly delivered, should be returned to the sending bank, according to a unique sorting code, to be allocated, to that end, by each participating bank. Part 4 Opening and Maintenance of Settlement Accounts Each bank operating in Kosovo that wishes to participate in the domestic clearing and settlement of payment orders must open and maintain a settlement account on the books of the BPK and must have it open and operational on such terms and conditions as specified by the Governing Board of BPK. Part 5 Payments To and From the Settlement Account (a) For each bank the following payments, each initiated by a payment order, can be made into and out of the settlement account: (i) (ii) Single bank payments Bilateral bank payments (b) The BPK will not debit a settlement account or allow cash withdrawal from it unless there is sufficient balance to cover the debit amount or withdrawal. (c) A single bank payment such as a cash withdrawal or deposit will be posted by the BPK to the bank s settlement account. Payment out of a settlement account to the BPK is carried out by posting a debit to the bank s settlement account. Payment by the BPK into a settlement account is carried out by posting a credit to the bank s settlement account. (d) A bilateral bank payment may be initiated by a payment order issued to the BPK and instructing it to debit the paying bank s settlement account and credit another bank s settlement account. Payment is carried out by posting a debit to the paying bank s settlement account and a corresponding credit to the other bank s settlement account.
(e) A debit or credit posted to a settlement account under this Part becomes final, irreversible and irrevocable, as soon as it is confirmed by advice sent by the BPK to each bank participating in the single or bilateral bank payment, not later than at such time after the conclusion of the daily clearing as prescribed in an operating procedure. (f) Notwithstanding subsection (e) of this Part and Part 6(b)(ii), a debit for a cash withdrawal by a bank must promptly be posted by the BPK to that bank s settlement account, and is immediately final, irreversible and irrevocable. (g) For each payment transaction, settlement is completed as soon as any resulting debit or credit, posted to the settlement account of a bank, party to the payment, becomes final, irreversible and irrevocable. Part 6 Payment Orders Processed by the BPK (a) A payment order instructing the BPK to carry out a single or bilateral bank payment may be submitted by a bank to the BPK either individually or as part of a batch. (b) The BPK will carry out payment for each payment order submitted to it (i) only against available funds in the paying bank s account and (ii) at any time before the end of the daily clearing as specified in an operating procedure, which for a value-dated payment order as prescribed in an operating procedure, must be on value date. (c) Where adequate funds for payment out of a settlement account are not available to the paying bank, the BPK, at it s discretion, may either reject or place the payment order in a pending queue, and advise the instructing bank accordingly. A payment order placed in a pending queue will be executed by the BPK in the sequence of its input and without advance notice only when funds in then paying bank s settlement account become available. The BPK may reject an unexecuted payment order any time before it is executed and will advise the instructing bank accordingly. A bank s payment order that has been neither executed nor rejected during the daily clearing is cancelled by operation of law at the conclusion of that daily clearing as prescribed in an operating procedure. (d) Where no adequate funds are available for a whole batch of payment orders, for the purpose of the immediately preceding subsection, the BPK may treat each payment order included in the batch as transmitted individually, and place it for execution against available funds, queuing, or rejection, in any sequence it deems fit. (e) Unless rejected, or put in a pending queue by the BPK as provided in subsection (c) above, a bank s payment order given to the BPK is irrevocable and may not be canceled by the bank. For a payment order in a pending queue, cancellation by the instructed bank is effective only when given to the BPK in a manner, time, and according to a procedure stipulated or approved by the BPK, enabling it to act on it before debiting the bank s settlement account.
(f) The BPK will reject any payment order that is not properly authenticated, contains insufficient bank payer, or payer details, or is in breach of this or any other Rule, operating procedure, or order. (g) A canceled or rejected bank s payment order cannot be executed unless resubmitted as a new payment order by the instructing bank. Part 7 Priority Payments Notwithstanding Parts 5(e) and 6(b)(ii), an operating procedure may allow a sending bank to designate a payment order governed by this Rule as priority payment. Subject to the availability of funds in the paying bank s settlement account, the BPK will endeavor to process such a priority payment as soon as it receives the payment order so designated. The BPK will promptly post the resulting debit and/or credit to the settlement account(s), and advise each bank participating in that single or bilateral bank payment of this fact, upon which the debit or credit posted to a settlement account becomes final, irreversible and irrevocable. Part 8 Construction This Rule shall be construed consistently with the Regulation and in accordance with internationally recognized best banking practices. Part 9 Operating Procedures and Schedule of Fees (a) The Governing Board of the BPK may adopt operating procedures, including on specifications for payment orders, timetables, and procedures governing the clearing and settlement. (b) The Governing Board of the BPK will publish from time to time, as an attachment to this Rule, its fee schedule prescribing fees and charges for services provided under this Rule. Part 10 Entry into Force The Governing Board of the Banking and Payments Authority of Kosovo adopted this Rule on September 28, 2000.