BOU to cap bank drafts too
May 22, 2007
THE central bank has added bank drafts to the sh20m cheque cap that will be effected in July. The move follows a decision by the regional central bank governors to limit the cheque amounts to improve efficiency in the region’s payment systems.
By Peter Kaujju
THE central bank has added bank drafts to the sh20m cheque cap that will be effected in July. The move follows a decision by the regional central bank governors to limit the cheque amounts to improve efficiency in the region’s payment systems.
Under the cap system, cheque amounts exceeding sh20m will not be accepted in the clearing house. The electronic clearing system will also be configured to reject any cheque amount that exceeds sh20m.
Cheque payees with amounts exceeding sh20m will be advised to deposit their cheques with banks.
The cap is being used as a measure of checking fraud and improving the payment systems.
John Chemongesi, the assistant director payments and settlement, told Stanbic Bank customers in Kampala that the move was safe and cheap.
“Cheque capping is intended to reduce exposure in the clearing house. Cheques by nature are prone to internal and external fraud.
“This explains why the East African governors decided to introduce a limit,†Chemongesi said.
He said the sh20m limit was arrived at after analysing statistics of payment volumes and fraud characteristics.
The central bank explained that cheque capping would strengthen risk management in the national payment system.
“We are working on electronic linkage and software that will enable straight-through processing.
The Uganda Revenue Authority is expected to be connected to the same system to streamline tax collection and improve service delivery,†Chemongesi said.
He said the bank was looking at introducing payment cards.
THE central bank has added bank drafts to the sh20m cheque cap that will be effected in July. The move follows a decision by the regional central bank governors to limit the cheque amounts to improve efficiency in the region’s payment systems.
Under the cap system, cheque amounts exceeding sh20m will not be accepted in the clearing house. The electronic clearing system will also be configured to reject any cheque amount that exceeds sh20m.
Cheque payees with amounts exceeding sh20m will be advised to deposit their cheques with banks.
The cap is being used as a measure of checking fraud and improving the payment systems.
John Chemongesi, the assistant director payments and settlement, told Stanbic Bank customers in Kampala that the move was safe and cheap.
“Cheque capping is intended to reduce exposure in the clearing house. Cheques by nature are prone to internal and external fraud.
“This explains why the East African governors decided to introduce a limit,†Chemongesi said.
He said the sh20m limit was arrived at after analysing statistics of payment volumes and fraud characteristics.
The central bank explained that cheque capping would strengthen risk management in the national payment system.
“We are working on electronic linkage and software that will enable straight-through processing.
The Uganda Revenue Authority is expected to be connected to the same system to streamline tax collection and improve service delivery,†Chemongesi said.
He said the bank was looking at introducing payment cards.