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Kenya-Central Bank bans big cheques

Discussion in 'Kenyan News and Politics' started by MaxShimba, Jun 24, 2009.

  1. MaxShimba

    MaxShimba JF-Expert Member

    Jun 24, 2009
    Joined: Apr 11, 2008
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    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
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    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 Ndung’u at a press briefing attended by KBA chairman and Kenya Commercial Bank chief executive, Martin Odour-Otieno, and Mr John Wanyela, KBA’s 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 payee’s (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 clear—using 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 payee’s account before sending the amount. “We want to make sure we are safeguarding ourselves,” Prof Ndung’u said.
  2. G

    Gashle Senior Member

    Jun 25, 2009
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    This is the same as what BoT introduced in March 2009. Uganda introduced the move way back 2007. In fact, the move is implemented in all East African states with the same aim as stated before. Habari ya ku forge cheques zenye value kubwa kwishne, they wont be around, ukijitahidi sana sana utaambulia Milioni 10 kwa TZ na sio zaidi. Nafikiri its a good move!
  3. Lole Gwakisa

    Lole Gwakisa JF-Expert Member

    Jul 1, 2009
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    Forgerers are not fools.They will study the system before making their move.
    The "new" interbanking system and transfer of cash between banks is open to abuse,so long as there is little or no security on the initiation of money transfer transfer, as compared to the cheque system
    It might be convenient to the banks but as we have learned from the BOT scandal, bigger crooks abound in almost all banks.