NCHL, CIAA discuss electronic cheque clearing controversy

The government’s anti graft body, deputy governors of the central bank and Nepal Clearing House Ltd (NCHL) officials today held discussion on the alleged 'corruption' in the software purchasing for the electronic cheque clearing system.
After a complaint, the Commission for the Investigation of Abuse of Authority (CIAA) on Thursday has halted the operation of NCHL that has just started its operation from Wednesday.
"The CIAA is positive towards the clearing house," said Nilesh Pradhan, chief executive of the NCHL that has central bank, Nepal Bankers Association (NBA) and SCT as its share holders.
The Electric Cheque Clearance (ECC) was supposed to start from December 29 after repeated postponements but the anti graft body directed it to halt the service the next day.
The system that will be in operation in the Kathmandu Valley only in the beginning is expected to take couple of months to expand the service across the country.
The NCHL has postponed its operation twice due to dispute among the banks and financial institutions regarding the high cost of operations and alleged corruption in software purchase.
The banks and financial institutions themselves are also not comfortable with the transaction cost too as they claim the recurring cost could become burden for the financial system in the long run.
According to the current structure, it will cost Rs 10 per cheque above Rs 5,000 and Rs 5 for a cheque up to Rs 5,000 transaction cost, 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, which they are claiming to be high.
The finance companies and development banks associations are yet to finalise their mode of participation as according to them they have to bear 64 per cent of the cost and the 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 the commercial banks and only 30 per cent belongs to development banks and finance companies.
The central bank has also been blamed for discouraging the government policy of transacting through cheque of over Rs 50,000 by making it expensive for the customers, though the central bank has cautiously said that it will not let the banks and financial institutions pass on the cost to customers.