Central Bank begins daily cheque clearance across Nigeria

CBN Governor, Lamido Sanusi

The policy was activated in Abuja and Lagos earlier in the year.

Cheque truncation, one of Central Bank of Nigeria’s on-going effort to reduce the settlement cycle of a cheque to one day from three in a concerted effort to ensure the success of its cash-less policy, has been activated across the states of the country.

The policy was activated in Abuja and Lagos earlier in the year.

The cheque truncation system would allow all branches of the Central Bank to capture all cheques in the respective branches and maintain them in a central server in Lagos. The system then allows all captured cheques from the bank to be transmitted to the clearinghouse from Lagos.

This activated cheque truncation policy will ensure that the settlement cycle of a cheque in Nigeria will be reduced to one day from an average of two to three days.

The Nigeria InterBank Settlement Systems, NIBSS, and Nigeria’s leading financial services software provider, Precise Financial Systems, PFS, worked with the Central Bank to achieve this breakthrough across all the 37 branches of the regulatory body located in state capitals in Nigeria and the federal capital territory, Abuja.

Yele Okeremi, MD/CEO, PFS, said with this new regime, all cheques presented for settlement will be resolved within stipulated date across the country.

“The cheque truncation system would allow all branches of the Central Bank to capture all cheques in the respective branches and maintain them in a central server in Lagos. The system then allows all captured cheques from the bank to be transmitted to the clearinghouse from Lagos” he said, in a communiqué.

According to him the system is responsible for the processing of all inward cheques and National Electronic Funds Transfer, NEFT, transactions of banks. While it would address all required management reporting, its controls are guided “as the system implements all required maker checker rules of the banks”, he said.

With the activation of cheque truncation through iTELLER platform in Nigeria, an important challenge the system has addressed is the ability of the Central Bank to meet the deadline for cheque truncation nationwide. Aside, the platform has also assisted the regulatory body to reduce cost, time and the stress level involved in its cheque clearing operations.

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“This system removes all logistics costs associated with clearing,” he said.

While further enumerating on the benefits of cheque truncation, he said before the cheque truncation regime, the banks will have to send their outward cheques to respective central clearing departments by dispatch riders or bullion vans. However, with the system, cheques can be truncated directly at the branch of deposit.

“This removes time-wasting collation and photocopying usually carried out at the bank branches. It also removes the need to post-encode cheques, and this provides the platform to use more agile cheque scanners for image and Magnetic ink character recognition (MICR) capture,” he said.

Other benefits of the new system, according to him, include reduction of stress and human efforts in clearing, elimination of all cheques substitution tendencies, reduction of time of consummating manual transaction thereby enabling the cashier to focus on other customer requirements as well as reduction of the man-hours required to attend to other customer’s need among others.

Mr. Okeremi said the Nigeria Interbank Settlement Systems (NIBSS) has a critical supervisory role in the cheque clearing system especially as regards how the new regime would influence the market as such; the system which enables the cheque clearing system is expected to run seamlessly for an effective and efficient cheque payment processing.

“Championing the on-going cheque truncation system is one way NIBSS is enabling the cheque payment and processing system in the nation. The financial institutions in the country are fast switching their practices to comply with the new cheque truncation regime.

“One basic implication of the new system is that the cheque clearing system in the country is tending towards real time clearing practice. The system has to be well positioned to ensure reliability, availability, sustainability, and recoverability in case of any disaster both by individual financial institutions as players and NIBSS as the supervisor”, he said.

NIBSS’ role in the new regime, he said, includes the provision of alternative backup system whereby any financial institution that experiences failure in their in-house clearing system would fall back to ensure that they meet up with every clearing session’s activities.

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