Banks to cut cheque clearance time
By Jackson Okoth
Bank customers will in the next three months see their cheques cleared faster.This is as Central Bank of Kenya (CBK) and Kenya Bankers Association (KBK) isolates large value payments from the cheque clearance house.
The two have jointly notified the public that they will stop processing of high value payments using cheques and electronic funds transfers (EFTs) of Sh1 million and above through the Nairobi Automated Clearance house, with effect from October 1, this year.
The change will also apply to domestic foreign currency cheques and electronic transfers whose value exceeds $35,000,£15,000 and 30,000 Euros.
enhance efficiency
These high value payments will be processed through the Real Time Gross Settlement(RTGS), also known as the Kenya Electronic Payments and Settlement System(KEPSS).
" This is to remove room for fraud and enhance efficiency," CBK Governor Professor Njuguna Ndung’u said yesterday.
CBK says that this policy change is aimed at enhancing safety and efficiency of the payment process and instruments.
It is also expected to increase economic activity by speeding up payment and settlement.
All commercial banks are participating in KEPSS and are therefore able to provide this service to their clients.
KEPSS, which was launched in 2005, has helped phase out the previous paper-based inter-bank settlement system and improved liquidity in the banking system.This capping of cheques and electronic transfers in the Clearing House is happening at a time when the clearing time remains long, at three working days. This has been an unnecessary inconvenience to individuals and businesses that have to put up with costs of waiting for the banks to clear the cheques.
first step
But KBA says creating a bypass in the cheque clearance superhighway is a first step towards the long awaited cheque truncation—use of electronic cheque https://cdn.standardmedia.co.ke/images to process payments.
"We expect this value capping measure to enable customers have a faster access to their funds as well as reduce costs," said KBA chairman Martin Oduor Otieno.