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Same day clearing Bank reps reject move to reduce cheques value

RECORDER REPORT

KARACHI: The proposal of the Federation of Pakistan Chambers of Commerce and Industry that the value of cheques be reduced to Rs. 250,000 under the 'same day clearing' scheme was shot down by bank representatives at a meeting held here recently.

The meeting was held under the chairmanship of Chief Manager/Chairman, Karachi Bankers Clearing House in the State Bank of Pakistan. M.M. Khan, Chief Executive, National Institutional Facilitation Technologies (NIFT) highlighting the progress on the 'Same day clearing' in the light of already reduced limit of the 'same day clearing' cheques i.e. from Rs one million to Rs 0.5 million informed the meeting about the daily statistics of the last three months of cheques between Rs. 0.5 million and Rs. 1.00 million and above.

He pointed out that cheques of Rs. 0.5 million and 1.00 million were 30 percent of the total of high value cheques presented for clearing. An average of 150 cheques per day are being presented for clearing. He was of the opinion that the 'same day clearing' has now stabilised and bank customers have started availing this facility and the limit can be further reduced if the State Bank of Pakistan and banks so agree.

Maqsood Ismail, Vice-President, FPCCI, commented that the facility of same day clearing has not been advertised in true sense and a large number of their members are still not aware of this facility.

His proposal that the value of cheques be reduced to Rs. 250,000, was, however, shot down by bank representatives who did not agree with the suggestion and argued that since; (a) it is a special/high value clearing facility, the limit of cheques may not be reduced further, (b) enough time is not available for the clearing officer of the branch to clear large number of cheques because the whole process has to be completed before 1.30 p.m, and (c) bank representatives emphasised that their clients are aware of this facility and are availing the same when they so require. In the last meeting FPCCI and KCCI had promised that it would promote this service with their members to enable them to avail this facility effectively.

Maqsood agreed that the trade bodies have not done enough to propagate this service and wanted banks to do the same. Bank representatives pointed out that NIFT had provided posters for the same day clearing which have already been displayed in the banking halls.

However, bank representatives suggested that if banking hours are increased by SBP, banks would be ready to process the same day clearing peacefully and accommodate large volumes of these cheques in case the limit is reduced.

M.M. Khan explained the working of NIFT that the clearing cheques are processed in 15 minutes and 'Return' cheques are also processed in 15 minutes. The rest of the time (two and a half hours) is spent in collection and delivery of the clearing cheques/return cheques from/to branches since the branch network of over 250 branches is to be physically covered. NIFT further opined that this process cannot be further quickened due to the sanctity/security of the cheques.

The chief manager/chairman advised the representatives of the banks to submit their suggestions regarding enhancement of counter hours so that the same may be forwarded to the competent authorities.

On a comment from FPCCI and KSE, representatives of banks and NIFT pointed out that even in developed countries which are fully automated and have electronic clearing, funds are never made available to customers before three days for the same city and 7 to 10 days for inter-city. They further commented that same day clearing facility is a unique facility being provided in Karachi for the benefits of business community.

After lengthy discussion it was resolved that:

The limit of Rs 0.5 million should be maintained till further orders. The banks may suggest in writing to State Bank as to what time they would like to enhance the counter hours/banking hours etc. on priority basis.

The NIFT should advise procedure as explained by them for providing the facility for same day clearing for the industrial area branches and should send circular to the branches accordingly.

The NIFT should work out a cut off time for accepting 'Return' cheques in a manner that funds can be made available by the branches to their clients before the close of the counter hours.

A meeting of treasury managers may be called in the near future to discuss inter-bank settlements/issues.

The bank should propagate the same-day clearing service to their clients through circulars/notifications etc, and trade bodies should extensively propagate this service to their members.