By James Anyanzwa

The operationalisation of the cheque truncation project amongst commercial banks has finally gone live.

The switch to electronically designed cheques came into play yesterday after commercial banks complied with the new cheque system.

Consequently, both upcountry and local cheques moved on to a single clearing zone of three days.

The longest cheque clearing period for upcountry cheques has been 10 days.

" We have gone live today and what basically this means is that all cheques both local and upcountry are on the same clearing zone," said Kenya Bankers Association chief executive Mr. Habil Olaka.

LOW COMPLIANCE

"I think we will now a very good system that is secure, faster and efficient in terms of costs of clearing cheques."

The cheque Truncation System was initially scheduled to go live in June but pushed forward to August 15 following low compliance rate with the electronically designed cheques.

The low compliance rate was attributed to printing constraints in the country thereby making it difficult for commercial banks to meet customers demand for the new generation chequebooks.

However KBA reckons that over 95 per cent of all cheque orders placed with the printers have been delivered to the banks.

The complete changeover to the new system and phasing out of the old cheques and clearing processes is pegged at 90 per cent compliance.

"So far indications are that everything is fine and cheque volumes are picking up," Olaka told The Standard yesterday.

"What we need now is to focus and ensure that the system stabilises but so far it is working well."

Automation of the clearinghouse is expected to reduce the costs of doing business amongst the commercial banks and improve efficiency of the national payments system.

KBA has introduced new cheques whose design complies with the security and operational requirements of the new system.

Banks are required to completely replace old cheques with new cheque truncation system compliant cheques n order to pave way for an automated clearinghouse.

Cheque truncation refers to a process in which physical cheques presented for payment in a bank by individuals or corporate bodies are converted to electronic form and the image is transmitted electronically to the clearing house for processing and eventual payment.