Banks Will Clear Cheques on Same Day from Nov 14
Abdul BasitDUBAI — Banks in the UAE will begin November 14 onwards clearing cheques on the same day that their customers deposit them, the Central Bank said on Tuesday.
This speedier clearance of cheques will help improve money circulation in the national economy. The Central Bank is also considering the additional step of introducing an “Express Clearing” facility under which a bank’s customers will be able to clear their cheques in two hours upon paying a fee.
“It was always intended to introduce same-day clearing as part of this programme of continuous improvement. Therefore, with effect from 14th November 2009, it will be possible for cheques to be cleared in the same business day,” the Central Bank said in a statement.
The UAE’s banking system currently processes an average of 100,000 cheques daily.
Under the new system, cheques deposited at banks before 10am will be cleared at 5pm on the same business day. Cheques deposited after 10am will be cleared on the following business day. The Central Bank aims for this service enhancement to benefit bank customers throughout the country.
A so-called Image Cheque Clearing System, or ICCS, has been in operation in the UAE since July 2008 and has brought consistency to the amount of time banks require to clear cheques. According to the Central Bank’s web site, 52 local and foreign banks operate a total of 804 branches countrywide.
The current cheque-clearing process can take up to several days. The new, shorter clearance time will apply regardless of the emirate or the bank that a cheque is drawn upon.
Banks have already tested the new system and say they are ready to put it into effect by the Central Bank’s deadline.
Rakbank General Manager Graham Honeybill told Khaleej Times last month that under the planned system, customers would have access to the proceeds of cheques deposited on the same day, so long as the cheques are deposited before the official cut-off time. Under the present system, a customer has access to his funds no sooner than the day after he deposits a cheque, Honeybill said.
The electronic processing of a cheque’s image, as performed by the ICCS, is not new in the Middle East. Qatar and Jordan have versions, and Oman has started one of its own.
Customers will get quicker access to their funds thanks to the improved facility, but it is less clear what the advantages will be for banks. Under the current system, banks have enjoyed several days of free “float” — access to money at no charge — on cheques awaiting clearance.
If a cheque entering the banking system is returned by its issuing bank, the bank where the customer deposited the cheque should inform this customer as soon as possible, through electronic channels such as SMS, the Central Bank said.
The improvements effective on November 14 are meant to enhance the image of the UAE banking system, the Central Bank added.