4. Defining Matching Rules

4.1 Introduction

There are certain standard rules that you can apply while matching nostro entries. As match rules are maintained at the bank level and are common to all the branches of your bank, you need not specify the details of a rule each time you need to use it. Instead, you can maintain its details in the Match Rule Definition screen.

The advantage of maintaining match rules is that at the time of automatically reconciling and matching external entries, you need to just specify the code assigned to the rule. All the details maintained for the rule will be automatically picked up and made applicable to the Nostro entries. This reduces your effort as you do not need to enter the parameters of a rule each time you need to use it.

Each match rule that you define for reconciling Nostro entries can be devised using the following parameters:

You can specify several rules using various combinations of the above parameters.

This chapter contains the following sections:

4.2 Maintaining Reconciliation Rule

You can invoke the ‘Reconciliation Rule Maintenance’ screen by typing ‘REDRULDF’ in the field at the top right corner of the Application tool bar and clicking on the adjoining arrow button.

If you are maintaining details of a new rule, click the new button on the Application toolbar.

The ‘Reconciliation Rule Maintenance’ screen is displayed without any details.

If you are calling a Rule Definition record that has already been defined, double-click a rule of your choice from the summary screen.

4.3 Features of the Reconciliation Rule Definition Screen

Assigning the Reconciliation Rule a Code

In Oracle FLEXCUBE, each matching rule that you define is identified by a fifteen-character code called a Rule Code. You can follow your own convention for devising this code.

The code that you assign to a rule should be unique as it is used to identify the rule across the branches of your bank. When you need to make the rule applicable while reconciling nostro entries, you need to just specify the code assigned to the rule. The attributes of the rule will automatically become applicable for matching transactions.

After you assign a matching rule a code, you can specify the parameters based on which internal and external transactions should be matched when the rule is used. The parameters that you can use to define a rule are the:

You can specify several rules using various combinations of the above parameters.

Determining Match Type

You can decide whether the Automatic matching process should perform a confirmed match or suggested match.

You can choose to either confirm or reject suggested matches. On confirmation the match status will be changed from ‘Suggested’ to ‘Open’. If confirmed, system will pass adjustment entries.

Indicating that Entries should be Aggregated

An internal entry is one that was passed by one of the modules of Oracle FLEXCUBE. An external entry is one passed by a correspondent bank in response to the entries originating from your side.

Internal transactions which match certain criterion can be aggregated before they are matched and reconciled by the automatic matching process. The criterion for aggregation is as follows:

For a match rule that you define, you can indicate either of the following:

This would facilitate the matching of one or many internal transactions with one or many external transactions.

Consider the following example.

Friendly Neighborhood Bank (FNB) has placed US $100,000 with Greenville Global Banking (GGB), Bangalore.

The various components of the placement are:

Component Amount
Principal US $100,000
Charges US $1000
Interest US $2500

The entries passed at FNB:

Component - Principal

Debit / Credit Account
Dr Loan GL
Cr GGB

 

Component - Interest

Debit / Credit Account
Dr GGB
Cr INT_INC

Component - Charges

Debit / Credit Account
Dr GGB
Cr CHG_INC

At GGB, the following entries are passed:

All the components of the transaction will be contained in the external statement. Oracle FLEXCUBE will check for the aggregation criteria and then aggregates the external entry and matches them.

The components of the external entry when aggregated amounts to US $103500.

Component - Principal

Debit / Credit Account
Dr FNB
Cr INT_GL

Component - Interest

Debit / Credit Account
Dr INTERNAL GL
Cr FNB

Component - Charges

Debit / Credit Account
Dr INTERNAL GL
Cr FNB

Using the Value Date as a Matching Rule Parameter

While defining a rule, you can indicate preferences for the matching criterion - Value Date. You have either of the option to indicate whether:

Indicating Identical Value Dates

Choose this option to indicate that the automatic matching process should match an external transaction with an internal transaction, only if the value date of the internal transaction is identical with the value date of the external transaction.

Indicating a Tolerance Range

You also have the option to specify that the automatic matching process should match an external transaction with an internal transaction, if the value date of an external transaction is within a permissible tolerance range.

If you choose this option you should also specify the upper (positive) and a lower (negative) limit of the tolerance range.

The positive and negative tolerance is taken into consideration while the automatic matching process is run. This process will match those external transactions with a value date greater than or lesser than the value date of the internal transaction within the tolerance range that you indicate.

Using Reference Number as a Matching Rule Parameter

You can use the reference number assigned to the transaction as a parameter for matching and reconciling Nostro entries. You have the option to use either the internal or external reference number as a matching criterion or you could use both.

In Oracle FLEXCUBE, you can indicate whether the full reference number or a part of it should be used for matching entries.

Using the Full Reference Number for Matching

If you indicate that full numbers need to be matched, you need to indicate whether the internal or external reference number should be matched. Your internal reference is the other entity’s external reference and their internal reference is your external reference.

Consider the following example.

Friendly Neighborhood Bank (FNB) has placed US $100,000 with Greenville Global Banking (GGB), Bangalore.

FNB which uses Oracle FLEXCUBE has assigned the placement the following reference number:

FNB s internal reference - 000MP01973640001

This is FNB s internal reference for the transaction. When the placement is recorded at GGB it is assigned the following reference:

GGB s internal reference - 2980631000

FNB s internal reference is GGB s external reference and GGB s internal reference is FNB s external reference.

Using Partial Reference Numbers for Matching

If you indicate partial matching, you can indicate the portion of the reference number that needs to be matched. In the case of partial matching you need to indicate the:

This will apply to both internal as well as external reference numbers.

Consider the following example.

The reference numbers generated in Oracle FLEXCUBE is a combination of a three-digit branch code, a four-character product code, a five-digit Julian Date and a four-digit serial number. A typical reference number would look like:

000MP01973640001

The bank with which you are matching entries generates ten digit reference numbers. Therefore the reference numbers generated by the other bank can records only the first ten digits of your reference number.

You have selected partial matching of reference numbers and indicated the following preferences:

When the transaction returns for matching Oracle FLEXCUBE will automatically check only the first ten characters of the reference number and match the entries.

Using Your Internal Reference Number as a Matching Parameter

As a matching rule criterion you can indicate that the internal reference number you assigned to the transaction should be identical with the external reference number of the transaction.

Using the External Reference Number as a Matching Parameter

As a matching rule criterion you can indicate that your external reference number should match with the internal reference number assigned to the transaction assigned by the other entity.

Using Amount as a Matching Parameter

The two options are:

You can further detail Amount Tolerance as:

These parameters can be defined for each currency. When a currency amount is not defined, tolerance amount will be considered to be zero by default.

Currency

All valid currencies in the system will be available for selection here. The tolerance limits can be different for different currencies.

Positive Percentage Tolerance

You can capture the percentage of positive deviation from a possible match. This will be allowed if the rule definition allows a tolerance for the amount and tolerance type is defined as percentage.

Negative Percentage Tolerance

You can capture the percentage of negative deviation from a possible match. This will be allowed if the rule definition allows a tolerance for the amount and tolerance type is defined as percentage.

Positive Amount Tolerance

You can use this to capture the positive deviation in amount for a possible match. This will be allowed if the rule definition allows a tolerance for the amount and tolerance type is defined as Amount.

Negative Amount Tolerance

You can use this to capture the negative deviation in amount for a possible match. This will be allowed if the rule definition allows a tolerance for the amount and tolerance type is defined as Amount.

Consider the following example.

Suppose the following are the internal entries passed by Flex cube for nostro accounts.

Dr/Cr Account Currency Amount Reference
Cr Nostro USD 10000 R1
Cr Nostro USD 10000 R2
Cr Nostro USD 10000 R3
Cr Nostro USD 500 R4
Cr Nostro USD 20000 R5
Cr Nostro USD 30000 R6

The following are the sequence of rules to be applied for Auto Matching.

Rule Match type Internal ref External ref Value date Amount type Tolerance
R1 Confirmed Identical Identical Identical Identical None
R2 Confirmed Identical Identical Identical Tolerance -100 and +100
R3 Suggested Identical Identical Identical Tolerance -5% and +5%

The following are external entries sent by another bank.

Dr/cr Account Currency Amount Reference
Dr External A/c USD 10000 R1
Dr External A/c USD 10000 R2
Dr External A/c USD 9900 R3
Dr External A/c USD 600 R4
Dr External A/c USD 21000 R5
Dr External A/c USD 29000 R6

Matching Details using the above set of factors are as follows:

Rule R1 Matching Details – Matched based on Identical Amount.

Rule Match reference Internal entry External entry Match Status Adjustment entry
Rule1 M1 R1 R1 OPEN None
Rule1 M2 R2 R2 OPEN None

Rule R2 Matching Details – Matched based on Amount Tolerance.

Rule Match reference Internal entry External entry Match Status Adjustment entry
Rule2 M3 R3 R3 OPEN 100
Rule 2 M4 R4 R4 OPEN 100

Since R2 is a confirmed match, adjustment entries are posted during automatic matching.

Rule R3 Matching Details – Matched based on Amount Tolerance

Rule Match reference Internal entry External entry Match Status Adjustment entry
Rule3 M5 R5 R5 SUGGESTED None
Rule3 M6 R6 R6 SUGGESTED None

Since R3 is a suggested match, adjustment entries are not posted during automatic matching. Rather they are posted only after the user confirms the entries during manual matching. If the entries matched during auto matching are rejected by the user, the entries become available for re matching.

Validations