NRB: NHCL to settle all cheques from mid-December

KATHMANDU, NOV 25 - 2012

Nepal Rastra Bank (NRB) has announced it would stop clearing and settlement of cheques from banks and financial institutions (BFIs) begining mid-December and that all BFIs have to switch to Nepal Clearing House Limited (NHCL) for electronic clearing of their cheques.

The NHCL has been carrying out electronic cheque clearing of its memers, while the central bank has been clearing and settling the cheques of those who have not yet become member of the NHCL. While all the commercial banks have taken membership of the NHCL, only 19 development banks and 18 finance companies have been clearing and settling their cheques through the NHCL.

NRB spokesperson Bhasker Mani Gnawali said that the NRB about two months ago had issued a circular, asking all BFIs to become NHCL member by December 16 for clearing and settlement of cheques.

Under the manual settlement, financial institution (presenting bank) collects the cheque of other institutions (paying bank) and take them to the NRB for settlement, which takes up to two days. On the contrary, for electronic settlement the presenting bank scans cheques and send them to the NHCL, which forwards them to the paying bank. The paying bank, after verifying the signature and other details, sends them back to the NHCL, which then forward them to the NRB for the final settlement. According to the NHCL, the entire process is completed in real time.

Neelesh Man Singh Pradhan, CEO of the NHCL, claimed the number of financial institutions (FIs) approaching it was increasing by the day and that the remaining FIs would become its members.

In a bid to accommodate a large number of BFIs in their system, the NHCL recently upgraded its system and software and the upgraded infrastructure has been in use for the past one week. “Currently, we are clearing and settling 8,108 cheques on average daily,” said Pradhan. “With the upgradtion we can provide facility to all the players of Nepali financial sectors.”

The NHCL was established about four years ago in the joint ownership of 23 commercial banks, two development banks, Nepal Rastra Bank (NRB) and Smart Choice Technologies (SCT) in order to switch the manual clearing into electronic system. However, it came into operation only a year ago as its operation was halted by the Commission for Investigation of Abuse of Authority (CIAA) to investigate over alleged misappropriation during the software procurement.

Some bankers had expressed strong reservation over the high cost at which the software was purchased as the cost associated is ultimately transferred to the member BFIs.

Source: The Kathmandu Post