Plans have been concluded to introduce a cheque truncation system that will enable cheque transactions to be cleared earlier.
The new system will guarantee clearance of cheques with a time frame of T+1 instead of the current T+2. The meaning is that instead of cheques to clear in three days, it will take only two days to clear.
In his presentation, the Acting chief executive officer of the Nigerian Inter-Bank Settlement System, Mr. Niyi Ajao said cheque truncation would bring about the best clearing system in the country. According to him, truncation means that the paper cheque will not move any longer.
“There has been a roadmap on cheque Truncation. August last year, NIBSS working with the banks in Lagos introduced a cheque image system”, he said.
Mr Dipo Fatokun, Director, Banking and Payment System Department, of the Central Bank of Nigeria (CBN) who spoke with newsmen during a stakeholders’ forum on cheque truncation organised by the CBN in Lagos at the weekend, said part of the benefits of the cheque truncation would be reduction in clearing days. Instead of T+2, which tanslates to three days, before you get value for your transactions, you get T+1.
“You know when you talk of money, time is very important. So, that one-day reduction in the clearing cycle, makes a lot of difference,” he said.
He said the cheque truncation would facilitate the alternative payment channels which the CBN is encouraging instead of using cash. “Instead of you carrying cheque around, you pay in cheque into your account, and that if you want to make payment, you use cheque, but based on the limit which is N10 million,” he said, adding that cheque truncation was an integral part of the cash-less policy.
On the challenges of cheque truncation, Fatokun said we need hardware to be able to present it. Then we need enlightenment on the part of those who are to participate in the programme. The onus of responsibility falls on the bank that is presenting the cheque. Those are some of the challenges that have to be addressed and which the CBN is actually addressing.
In order to address the risk, he said the CBN would be visiting banks with the Working Group and NIBSS to ensure that everything is in place and to mitigate the risks that could arise from the implementation of the cheque truncation policy.