Prof. Njuguna Ndung’u,Governor, Central Bank of Kenya CC image courtesy of Alliance for Financial Inclusion on Flickr
A new clearing system has been adopted by all Kenya’s commercial banks, allowing cheques to be cleared and the money accessed within one day.
The Central Bank of Kenya (CBK) and commercial banks embarked on the joint venture which sought to improve their operating systems and reduce the time taken to settle cheque payments.
The venture saw the introduction of cheque truncation, an automated system that allows processing based on electronic images which will take effect from August 19 across all banks.
Speaking at a media briefing yesterday, CBK governor Njuguna Ndung’u described the development as “a milestone in terms of our efficiency in the clearing system and a major step toward reducing the cost of doing business”.
“The final deliverable initiative of the cheque truncation project is to reduce the clearing period to one clearing day or T+1,” Ndung’u said.
“Today I am happy to announce that by further reducing the clearing period, banking customers will benefit by accessing their funds at much shorter time to conduct economic activities.”
Kenya Bankers Association (KBA) chairman, Jeremy Awori, said the new developments will be at no extra costs, calling on the banks to be well prepared to ensure smooth implementation come August 19.
Kenya’s leading network operator, Safaricom, has been contracted to provide network connectivity across the industry so as to facilitate the bulk transfer of messages where it has outsourced the infrastructure of Jamii Telecom and Kenya Data Network.
The Cheque Truncation System was adopted in 2011, with the T+2 (clearing of cheques in two days) being used from 2012. The new system is dubbed the “T+1”
The system comes at a time when commercial banks are preparing to compete with mobile money transfer services, which are becoming a preferred mode of conducting transactions.
