Use of cheques rises 10pc as clearance time falls to one day

Business transacted through cheques in Kenya rose 10 per cent in the year to June 2014 helped by reduction of clearance time to one day, a Central Bank of Kenya report shows.

Some 19.2 million cheques valued at Sh2.42 trillion were processed during the financial year ended June, compared to 18.4 million cheques worth Sh2.19 trillion the previous year.

Clearing time for cheques dropped from three to one day from August 2013, boosting frequency of use.

“This outcome can be attributed to the reduced clearing cycle after implementation of cheque truncation and the trust the public has in the new clearing system,” said the CBK 2014 report.

The growth continued in the first four months of CBK financial year 2014/15 (July to October 2014). Some 6.78 million cheques worth Sh873.07 billion were processed compared to 6.48 million cheques worth Sh796.48 billion over a similar period in 2013.

The change in the clearing cycle followed the successful introduction of cheque truncation in 2011 that is an automated system allowing processing based on electronic images.

This eliminated the practice of physically moving cheques from receiving banks to a central clearing point in Nairobi, then onwards to paying banks.

The system has also reduced cheque fraud, with lenders standardising cheque security features.

According to CBK, cheques accounted for 65.05 per cent of total volume of transactions through the Automated Clearing House (ACH) in the year to June 2014.

ACH saw 29.55 million transactions with a value of Sh2.89 trillion, compared to 27.82 million transactions valued at Sh2.607 trillion in the year to June 2013.

The use of Electronic Funds Transfer (EFT) grew faster than that of cheques over the one year period though. EFT-based payments increased by 14.51 per cent during the period, from Sh411 billion to Sh471 billion.

Foreign currency-denominated cheque clearances returned a mixed performance during the year, dominated by the dollar.