The Kenya Bankers Association (KBA) is preparing to implement a new Cheque Translation System (CTS) fronting a countdown campaign that will see the replacement of the old design of cheques.
The Chief Executive Officer (CEO) of the KBA, Mr Habil Olaka said “come the 15th August 2011, the Kenyan banking system will switch to a more efficient system of clearing cheques.”
According to the KBA , 95% of the new cheques books have been printed and are ready to be issued.
“Some of the benefits are that customers across the country will experience a faster and more secure clearing system,” Mr Olaka said in a press conference that was held in Nairobi, Kenya, “the CTS will phase out the cumbersome practice of physically transporting cheques from all bank branches countrywide to the automated clearing house using courier services. It will reduce paper work in banks thus reducing opportunities for fraud.”
Central Bank of Kenya’s Governor Prof Njuguna Ndungu lauded the move to jumpstart the campaign saying, “in today’s fast paced electronic environment, we in the banking sector need to remain at the forefront of protecting our customers and ensuring there is maximum efficiency and minimal risk to their transactions.”
It was noted that the main challenge facing Kenya’s banking industry is both access to services for a wider population and ensuring that the costs of the banking services are affordable to the customer.
The KBA said they have initiated services such as value capping, currency centers, and the credit information sharing geared towards making banking affordable, safer and more accessible.
KBA has underscored the need for all banking customers in Kenya to discontinue use of the old design cheque books as old-design cheques will take up to 21 days to clear.
For replacement, all a customer will need to do is to order the new cheque book at their respective banks in the usual manner, said the KBA CEO, explaining that “the new CTS will cater for both the Kenyan shilling and Domestic Foreign currency cheque drawn on banks in Kenya. The clearing process on foreign cheques drawn out of Kenya will be unaffected.”
Kenya currently has 2 clearing zones; the local and upcountry zones with a clearing period of 3 to 10 days respectively. With the CTS the two clearing zones will be merged into one clearing zone of 3 days upon going live on the system, “which is clearly a massive improvement for the up-country account cheque holder,” the CEO said.
Added he: “Once we are on one clearing zone, we shall subsequently bring down the clearing duration from 3 days to 2 days and eventually to 1 day clearing as the system is technically apt to do so. This process will only be effective once all banks and systems comply with all requirements.”
He further said CTS only changes the way the way information is transmitted across the system: the cheque gets deposited at the collecting bank and transmitted to the clearing centre of the bank before it is moved to the Automated Clearing House and then the paying bank where payment information is later sent back to the collecting bank via the clearing house again.
Previously, this chain would require the actual physical movement of the cheques to the clearing house and the settlement information back through the clearing house. Mr Olaka explained that the new system will take an image of the front and back of the cheque, together with the payment details and transmit them across the channel.
“Since the information is electronic as opposed to the manual process pre-truncation, it makes the process faster, more efficient, safer and as a result, will curb fraud. Additional features have been effected on the new cheques to ensure they are tamper-proof.”