Bank of Uganda cuts down period of processing cheques

Bank of Uganda governor, Emmanuel Mutebile. Photo/File

BANKING
The Central Bank has announced a roll out of a new cheque processing system that should ease existing stringent roadblocks that have made processing cheques a slow and expensive mode of cash transfer.

Currently it takes between four to five days to cash in on a cheque, especially when the transaction involves more than one bank.

But thanks to the new cheque truncation system, your cheque will now be cleared on the same day or within 24 hours depending on whether the cheque is local or outstation.

According to Central Bank, the new Automated Clearing System, which will begin on April 20, will remove the physical movement of cheques between banks and across bank branches thus speeding up the process of cheque clearance, settlement among banks and realisation of funds by beneficiaries.

Cheque truncation system involves exchanging cheque images in the clearing process instead of exchanging actual physical cheques. The system is associated with a reduction in risks involved in cheque clearing as electronic clearing is less vulnerable to fraud than manual cheque clearing. 

"Under the new automated clearing system, cheques presented for payment will be scanned by the collecting banks and the resulting high definition images [ together with relevant electronic date]  will be transmitted electronically to the paying banks through the clearing house," said Bank of Uganda governor, Emmanuel Mutebile in a statement. 

He said the entire country will have access to a single centralized cheque clearing platform as opposed to the current decentralized and unaligned platforms.

Cheque truncation is one of the technological advancements in the banking sector as financial institutions move to serve their customers better and forestall increasing cases of fraud in the banking sector.