The central bank — financial advisor of the government — is discouraging government policy of transacting through cheque by making it expensive for the customers.
The government has been trying to encourage people to use account payee cheque for over Rs 50,000 transaction but the central bank affiliated Nepal Clearing House Ltd (NCHL) is charging banks and financial institutions for clearing cheques, which the bankers are ‘suspected’ to pass on to the customers discouraging transaction through cheque.
However, the central bank claimed that it is 'cautious' that banks and financial institutions' not pass the cost on to the customers.
The NCHL that is going to operate Electric Cheque Clearance (ECC) is charging commercial banks Rs 10 per cheque above Rs 5,000 and Rs 5 for a cheque upto Rs 5,000, except the costs that banks and financial institutions have to bear to get membership of the clearing house, buy software, network connectivity, login fee and annual renewal fee.
"It is going to be an expensive affair from software installation to per cheque clearance cost," said a banker, without wanting to be named. "Either the banks and financial institutions have to bear the extra cost or pass it on to the consumers, both not being very practical option," he added.
The software is financially not viable but we cannot protest against the central bank, said another banker, according to whom the company has bought software at three times higher cost from Jordan-based software developing company ProgresSoft Corporation.
The company has developed the software for Cheque Truncation System (CTS) which will help automated cheque clearance.Currently, the NHCL has central bank, Nepal Bankers Association (NBA) and SCT that provides integrated shared services network for ATMs and Point-of-sale (PoS) terminals — as share holders.
NCHL has authorised capital of Rs 250 million and issued capital of Rs 128.57 million, out of which 70 per cent to Rs 89.99 million has been paid by the promoters. The NHCL will float 30 per cent shares to public later.
It has currently 27 institutional promoter shareholders including Nepal Rastra Bank, 23 commercial banks, two development banks.
However, the development banks and finance companies are also going to be its equity partners soon, said SCT managing director Rabindra Malla, who differed that the system is costly.
"It comes to almost at the cost of installing an ATM," he said, adding that the system will save time cost as automated system will reduce operating cost in the long run.
According to president of Nepal Finance Companies Association Rajendra Man Shakya, the association is analysing the cost currently. "We were not part of the process in the beginning," he said, adding that Development Bankers Association-Nepal and Nepal Finance Companies Association have been involved recently. But their equity structure is still under discussion.
But, the members of NBA that is one of the major shareholders, opined that the central bank's move to award the clearing business to a private sector was theoretically wrong as the private sector will automatically work for profit. But others claimed that there is no wrong in the involvement of private sector but expensive software and cheque clearance charges should be questioned.