The Kenya Bankers Association (KBA) said on Thursday that all banks would now credit customers accounts with cheque proceeds after two days in urban areas and after three days for upcountry cheques. Photo/FILE
Kenya has officially moved to a new cheque payment cycle that businesses and policy analysts say will stimulate economic activity following a six-month trial period.
The Kenya Bankers Association (KBA) said on Thursday that all banks would now credit customers accounts with cheque proceeds after two days in urban areas and after three days for upcountry cheques.
“Customers will get their funds cleared much quicker, ensuring business payments are processed much faster and generally increasing the flow of funds in the economy,” said KBA chief executive Habil Olaka.
The new cycle is two days shorter for cheques issued in urban areas and seven days quicker in the case of upcountry transactions. It means that proceeds from cheques deposited say on a Monday should be available by Thursday.
Previously they would have been available the following Monday except for banks which regard Saturday as a working day.
Kenya Association of Manufacturers vice chairman Polycarp Igathe, who is also the managing director of Haco Tiger Brands, said that the new cycle, known as T+2, would help suppliers receive payments quickly and buyers to plan better.
“It is an aspect of economic efficiency,” he said adding that faster processing of payments.
Joseph Kieyah, an analyst at the Kenya Institute for Public Policy Research and Analysis said that the new cycle would help faster circulation of money, potentially spurring economic growth.
Mr Olaka said that in September and October last year 1,599,541 cheques with a value of Sh186.12 billion and 1,420,320 cheques with a value of Sh170.27 billion respectively were cleared using the new system.
The Central Bank of Kenya (CBK) and KBA are implementing the electronic system at an estimated cost of Sh600 million as part of reforms of the national payments system.
Five security printers; De La Rue, Punchline, System Media Technologies, Kalzmart and Taws were awarded tenders to print the new generation cheques.
The development comes as Kenyans adopt new technology to make and receive payments, including through mobile handset enabled solutions.
Mr Olaka said on Thursday that commercial banks started implementing the new clearing cycle last week after successfully reducing the processing time for all cheques to an average of three days over the past six months.
KBA replaced a manual clearing system with an automated one in August last year making it possible for customers with up-country cheques to receive payment in an average of three days down from an average of 10.
All other cheques took an average of four days using the old system prior to the implementation of the new one, also called the cheque truncation system.
Customers were expected to apply for new cheque leaves with standard sizes and uniform security features that would be easily recognisable by the processing machines as part of the new system.
Mr Olaka said that the new cycle would ensure that cheques deposited in any branch of commercial banks would be cleared within three days countrywide. [email protected]
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
