A receiver of a cheque will benefit from now onwards when transferring a cheque from another bank, whereas the payee will, unlike earlier days, not gain as the cheques will be settled the same day from Monday.
Not only consumers but banks and financial institutions too will have to change their cash management policy with the start of the electronic cheque clearing (ECC) system.
"Nepal Clearing House Ltd (NCHL) is going to settle the first cheque electronically on Monday at 11.30 am at the central bank," said chief executive of NCH Nilesh Pradhan.
"We will settle the cheques electronically twice everyday – at 11.30 am and 3.30 pm – from Monday," he said, adding that the clearing house had allowed access of their software to member banks and financial institutions from Friday. The clearing house has 32 banks and financial institutions as its members as of now that will increase in the coming days.
If one is depositing a cheque, one will benefit, as the depositor will get the cash transferred the same day unlike the current manual system that takes at least two days.
Those who are benefiting from the traditional 'pay late theory' are going to get less time as the electronic transfer will benefit the collectors if one is smart enough in following the settlement timings.
With electronic cheque clearance, a cheque will be settled at 11.30 am, if one deposits the cheque in the morning. Similarly, the cheque will be settled at 3.30 pm, if one deposits in the afternoon. However, if anyone deposits after 3.30 pm, the collector cannot take advantage as the cheque will be settled the next day at 11.30 am.
The system will be in operation in Kathmandu valley in the first phase and in a couple of months it will be expanded across the country.
But the central bank, for the time being, will also keep the current manual system in operation, as most of the development banks and finance companies are yet to participate at the ECC. Bankers have opined that the clearing house will not even be able to get back its capital cost if development banks and financial institutions do not participate in the system.
Some banks and financial institutions are still not comfortable with the transaction cost as they claim that the recurring cost could become a burden for the financial system in the long run.
According to the current structure, it will cost Rs 10 per cheque to settle an amount above Rs 5,000 and Rs 5 for a cheque to settle amounts of up to Rs 5,000 as transaction cost, besides the costs that banks and financial institutions have to bear to obtain membership of the clearing house, buy software, network connectivity, login fee and annual renewal fee.
The associations of finance companies and development banks claim that they have to bear 64 per cent of the cost and commercial banks will bear only 36 per cent of the total cost, whereas 70 per cent of the total cheques that come for clearance everyday belongs to commercial banks and only 30 per cent belongs to development banks and finance companies.
The ECC that was supposed to start from December 29, 2011 had been repeatedly postponed and the CIAA gave it a green signal to start operations on Wednesday.