Kampala — Bank of Uganda (BoU) has reduced the duration of clearing cheques from four to two days.
In text messages sent out to Barclays customers last week, the bank informed its clients that "from April 20 [last Friday] local cheques clearing will take two days," a shift from the old system where an in-house cheque would take about four working days to be cleared while one from another bank would take about five or so days to be cleared.
Mr Emmanuel Tumusiime Mutebile, the Bank of Uganda governor, said in a press statement that the new system would reduce the risk of fraud associated with manual clearing and costs.
"The beneficiaries of cheques will therefore receive their funds more rapidly," he said, adding that the central bank was working on a plan to clear cheques in just a single day.
The new automated cheque clearing system, according to the central bank, is centralised to a single clearing platform, with the aim to shorten cheque clearing, a key payment system in the money markets.
According to Mr Mutebile, once the cheques is presented, it is scanned by the collecting bank and the images together with additional data is transmitted electronically to the paying banks through the clearing house.
Mr Wilbrod Owor, the Uganda Bankers Association executive director, said the new system highlights the importance of technology in a rapidly changing banking environment, adding it will benefit clients by fastening the process.
He also said it is likely to cut back on the problem of bounced cheques since issuers will be wary of the little allowance within which their accounts can hold without credit.
Mr Kayondo Everest, the Kampala City Traders Association, welcomed the move, saying it is a milestone in banking.
However, he urged the central bank to reduce the cheque clearing duration to instant.
Time, he said, is an element of production, therefore, it should not take business people a whole two days of waiting to access their money, especially at a time when technology has eased payment systems.
Cyber threats: Like any other digital system, the new automated cheque clearing system is susceptible to cybercrime. However, Mr Wilbrod Owor, said the central bank, working with different stakeholders, has taken a number of security measures to curb cyber security risks.
In addition, he said, a physical cheque is still required with this system, so in case of challenges, reference can always be picked from the physical paper.