Daily cheque clearance zooms to Rs. 17 b from Rs. 12 b

CITS enhances cheque payment velocity:

Hiran H. Senewiratne

CHEQUE CLEARING: The country’s total cheque transactions for a day has increased to Rs 17 billion from Rs. 12 billion with the introduction of the electronic cheque clearing system, Central Bank sources said.

The system known as the Cheque Imaging and Truncation System (CITS), has created a common cheque clearing framework/platform across the country within the commercial banking system, General Manager - Lanka Clear, Anura de Silva said.

He said this system has enabled all banking customers in the country to realise their cheques the following day, by enhancing the velocity in payment. Therefore all commercial banks have been integrated into the CITS system.

Further, Government payments such as salaries, pensions and payments to service personnel can now be cleared throughout the country on the following day.

As the cheque is the small man’s mode of payment, improvements to the retail payment system have significant social and economic benefits for the public as a whole, he said.

Under this system more liquidity will be pumped into the country’s money market and the number of transactions per day have increased by an average of 250,000 transactions from 125,000 with the introduction of the system, de Silva said.

Before the system was installed all the banks used more traditional methods, including local clearing and regional clearing methods, which are more manual based, leaving Rs 5 billion worth of cheques unrealised due to various reasons.

Certain economically backward areas mostly in the North and East took more than 15 to 30 days to realise a cheque. This has been addressed by this system enabling more business activities to take place.

A faster cheque clearing system would help the regular income receivers to avoid borrowing money from informal sources to bridge the gap between the receipt of the cheque and realisation of proceeds. This would be beneficial to poorer segments of society.

Lanka Clear is known as the national cheque-clearing house in all commercial banks in the country operates under a diversified and incorporated limited liability company. It has invested more than Rs. 600 million in the system.