KATHMANDU, Dec 16, 2012
Banks and financial institutions (BFIs) that continued to settle payments made through checks manually will not be able to do so from Sunday in the Kathmandu Valley.
Nepal Rastra Bank (NRB) that repeatedly suggested the BFIs to switch to electronic means to clear checks has made it mandatory for them to follow electronic check clearing system via Nepal Clearing House Limited (NCHL) from Sunday.
“Check payment will not happen physically in Kathmandu now,” said NRB Spokesperson Bhaskar Mani Gyawali. “BFIs will need to settle it electronically from Sunday,” he told Republica on Saturday
With the enforcement of this provision, people holding an account in, say, Bank ´A´ but have received payment through check issued by, say, Bank ´B´, would find the amount deposited in his Bank ´A´ account within two to five-and-half hours, without going to Bank ´B´.
So far, this process of clearing checks within a city used to take as much as two days, as BFIs handled checks physically -- meaning they were sending someone along with the check to the central bank prior to settlement of payments. Settlement of checks received from remote areas used to take as long as a month.
From Sunday, however, all the BFIs will only scan the check and send the image along with other details to the NCHL, which will then be forwarded to NRB. This will bring down the time of settling check payments to few hours.
In order to switch to electronic clearance, the BFIs need to be a member of the clearing house, as it works as an intermediary between two banks to settle check payments. So far, NRB and all the commercial banks have already acquired its membership.
However, of the 90 development banks, half of which are based in the Kathmandu Valley, only 32 are its member. Likewise, of the total 69 finance companies, most of which are based in Kathmandu, only 31 have acquired NCHL´s membership.
“We will not clear checks physically for any BFI based in Kathmandu from Sunday. If they want to serve their clients, they must be a member of NCHL,” Gyawali stated.
As majority of development banks and finance companies have not yet joined NCHL, Gyawali´s statement suggests they will not be able to settle checks from Sunday. The financial institutions had not signed up to the NCHL citing that rate charged by it for the software (to be used for settlement process) was higher.
Nonetheless, NCHL officials said about a dozen development banks and finance companies are in the process of singing an agreement to become its member soon.
As for the regional-level development banks and finance companies based outside the Valley that are not yet covered by NCHL, Gyawali said NRB has pledged "some time" to switch to the new system.
“We are preparing to reach them soon. But till that´s done, NRB has agreed to continue to clear their checks through its regional offices,” said Nilesh Man Singh Pradhan, chief executive of NCHL.
Source: Republica
Banks and financial institutions (BFIs) that continued to settle payments made through checks manually will not be able to do so from Sunday in the Kathmandu Valley.
Nepal Rastra Bank (NRB) that repeatedly suggested the BFIs to switch to electronic means to clear checks has made it mandatory for them to follow electronic check clearing system via Nepal Clearing House Limited (NCHL) from Sunday.
“Check payment will not happen physically in Kathmandu now,” said NRB Spokesperson Bhaskar Mani Gyawali. “BFIs will need to settle it electronically from Sunday,” he told Republica on Saturday
With the enforcement of this provision, people holding an account in, say, Bank ´A´ but have received payment through check issued by, say, Bank ´B´, would find the amount deposited in his Bank ´A´ account within two to five-and-half hours, without going to Bank ´B´.
So far, this process of clearing checks within a city used to take as much as two days, as BFIs handled checks physically -- meaning they were sending someone along with the check to the central bank prior to settlement of payments. Settlement of checks received from remote areas used to take as long as a month.
From Sunday, however, all the BFIs will only scan the check and send the image along with other details to the NCHL, which will then be forwarded to NRB. This will bring down the time of settling check payments to few hours.
In order to switch to electronic clearance, the BFIs need to be a member of the clearing house, as it works as an intermediary between two banks to settle check payments. So far, NRB and all the commercial banks have already acquired its membership.
However, of the 90 development banks, half of which are based in the Kathmandu Valley, only 32 are its member. Likewise, of the total 69 finance companies, most of which are based in Kathmandu, only 31 have acquired NCHL´s membership.
“We will not clear checks physically for any BFI based in Kathmandu from Sunday. If they want to serve their clients, they must be a member of NCHL,” Gyawali stated.
As majority of development banks and finance companies have not yet joined NCHL, Gyawali´s statement suggests they will not be able to settle checks from Sunday. The financial institutions had not signed up to the NCHL citing that rate charged by it for the software (to be used for settlement process) was higher.
Nonetheless, NCHL officials said about a dozen development banks and finance companies are in the process of singing an agreement to become its member soon.
As for the regional-level development banks and finance companies based outside the Valley that are not yet covered by NCHL, Gyawali said NRB has pledged "some time" to switch to the new system.
“We are preparing to reach them soon. But till that´s done, NRB has agreed to continue to clear their checks through its regional offices,” said Nilesh Man Singh Pradhan, chief executive of NCHL.
Source: Republica
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