Commercial banks will now take only two days to determine the fate a cheque presented at the automated clearing house.
This is a change from the previous old clearing cycle where a customer had to wait for three working days before a cheque is cleared for payment.
Effective January 16, all Clearing House member banks have been implementing the new cheque clearing cycle, making it possible for customers to access funds earlier.
“The new cycle is a key deliverable of the project and the most beneficial to the banking public. Customers will be able to get fate of their cheques sooner, giving them access to their cleared funds sooner. We see this as a major benefit to the customer, and we are proud to have kept the promise we made when we embarked on the cheque Truncation project,” said Habil Olaka, the Kenya Bankers Association (KBA) Chief Executive Officer.
The switch to electronically designed cheques went full blast on August 15, last year, after commercial banks complied with the new cheque system.
Consequently, 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.
The Cheque Truncation System was initially scheduled to go live in June last year 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 cheque books.
Automation of the clearing house is expected to reduce the costs of doing business amongst 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.
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 by the paying bank.
This latest milestone now ensures that cheques deposited in any branch of commercial banks will be cleared within three days countrywide.
“We would like to thank the customers for their cooperation during the implementation of the system. KBA is committed to employ technology to ensure that the twin objectives of increased access and reduction of the cost of banking services is achieved,” said Olaka
By Jackson Okoth, The Standard