NAIROBI, Kenya, Jun 28 – All upcountry cheques will now be cleared in two working days, as part of the Kenya Bankers Association’s (KBA), efforts to roll out the Cheque Truncation system countrywide.
The KBA has announced that effective July 1, 2012 all upcountry cheques (those not presented in Nairobi) presented to the Automated Clearing House will not attract any clearing commission charges and will therefore be treated as local clearing.
In conjunction with the Central Bank of Kenya (CBK), the KBA automated the process by which banks clear cheques with the introduction of the Cheque Truncation system, which sought to reduce costs to the customer.
“This is a significant relief for bank customers who live and transact upcountry and in remote areas…It effectively makes the country ‘one clearing zone, and passes the benefit of reduced cost of clearing as promised at the inception of the project’,” said KBA Chief Executive Officer Habil Olaka.
The switch to electronically designed cheques went full throttle on August 15, last year, after commercial banks complied with the new cheque system.
Upcountry and local cheques moved on to a single clearing zone of three days, from the previous longest cheque clearing period for upcountry cheques having been 10 days.
“Now the upcountry commission on cheques presented through the clearing house should cease, in line with the KBA guideline, which therefore means that all member banks have made the necessary amendments to their systems in preparation for this change that takes effect on 1st July,” Olaka added.
The Cheque Truncation system has been recognised by the Ministry of Public Service as one of the most innovative transformations in Kenya’s banking industry, having changed the process from one driven by the physical (manual) exchange of cheques to the electronic capture and transmission of data between the banks.
“We are proud of the technological innovation we have been able to realize in conjunction with the Central Bank. Together we continue to work to improve the flow of monetary transactions, thereby contributing to economic development,” added Olaka.