All payments by cheque have been restricted to a value below Sh1 million as the banking industry seeks to reduce instances of fraud while enhancing efficiency in settlements. Central Bank of Kenya. Photo/ File Related Downloads The cap will also apply to domestic foreign currency cheques whose value will not exceed 35,000 dollars, 15,000 pounds and 30,000 Euros. The new order, set in agreement by the market regulator, Central Bank of Kenya (CBK), and the Kenya Bankers Association (KBA) takes effect on October 1, 2009. This policy change is aimed at enhancing safety and efficiency of the payment process, said Central Bank governor, Njuguna Ndungu at a press briefing attended by KBA chairman and Kenya Commercial Bank chief executive, Martin Odour-Otieno, and Mr John Wanyela, KBAs chief executive. Anyone writing a cheque bearing a value equal to or more than Sh1 million will then have to give such instructions to their bank. On receipt of such information, the bank will then make an electronic payment to the bank where the person receiving payment holds an account. Customers will have access to their funds much faster that they have been accessing before, Mr Odour-Otieno said. Where a customer insists on a cheque whose value is more than Sh1 million, such a cheque will have to be written in the name of the payees (the person making payment) bank effectively reducing the cheque to mere instructions. Reduce backlog This will avoid high worth cheques going though the clearing house, where banks meet to settle cheque payments by physically exchanging cheques and money, thereby reducing backlog and incidence of fraud. Under the current system an inter-bank cheque takes a minimum of three days to clearusing the new system such payment will be done on the same day the instructions are received. The safeguard in reducing the risk on fraud comes as the bank making such a payment has the advantage of satisfying itself of the authenticity of the instructions and the health of the payees account before sending the amount. We want to make sure we are safeguarding ourselves, Prof Ndungu said.