What is cheques in clearing

Foreign Exchange Transactions. Debt Securities. Investment Abroad. Economic and Financial. Economic Indices and Indicators. Money and Banking. Public Finance. External Sector. Real Sector. Financial Institutions. Summary Statement of Assets and Liabilities. Ultimately you can refer a dispute to the Financial Ombudsman Service. The vast majority of cheques are paid and do not bounce. Only around 0. The typical reason for a bank to bounce a cheque is because a customer does not have enough money in their account to pay the cheque or they have used all of their overdraft facility.

In addition, when a bank spots a fraudulent cheque it will bounce it. But banks also bounce cheques because: the cheques have not been signed correctly e. A cheque is valid for as long as the debt between the two parties i. However, it is common banking practice to reject cheques that are over six months old to protect the person who has written the cheque, in case the payment has been made another way or the cheque has been lost or stolen.

This six-month timeframe is at the discretion of individual banks. It should not be assumed that cheques older than six months would automatically be rejected as the only definite way to cancel a cheque is for the person who wrote it to request that a stop be placed on it.

If you have a cheque that you want to pay in that is more than six months old, your best course of action is to not pay it in and instead obtain a replacement from the person who gave it to you.

Where there is a dispute, a cheque remains legally valid in order to provide proof of the existence of a debt for a period of six years, which is the Statute of Limitations. You have a legal right to stop a cheque before the cheque has been paid Bills of Exchange Act However, there is be significantly less time to do this with cheque imaging as the clearing timescales are much quicker and the recipient might pay in the cheque via a mobile banking app.

If they do, it means that the clearing process will begin sooner than if the cheque recipient has to visit a bank branch to pay it in. There are also limited circumstances in which stopping a cheque is permissible, as has always been the case.

You should talk to your bank or building society first. Can a returned cheque be presented again? There are certain circumstances where an unpaid cheque can be represented by the presenting bank. The customer will be advised by their bank in the IRD about the position. Under the new system, what precautions should a drawer take when issuing a cheque?

The normal precautions customers should observe when dealing with their cheques and other negotiable instruments still apply. Will there be an increase in the maximum amount limit for cheques when banks migrate to the new cycle? There will be no increase in the value cap limits due to the new cycle. Nairobi, 31 July - The Kenya Bankers Association KBA today announced new cheque processing timelines, which will result in a one day reduction in the time it takes for banks to process interbank cheques.

The move will benefit bank customers by speeding up their cheque payment transactions, ultimately enhancing the flow of funds in the economy.

Banks will migrate to the new clearing cycle from 19th August Jeremy Awori noted that the new clearing cycle was a major milestone for the industry. We are excited about this development that will benefit bank customers by speeding up their cheque payment transactions, ultimately enhancing the flow of funds in the economy," he said. The new clearing cycle means that the "Paying Bank" has one business day to determine the fate of a cheque that they receive from the "Presenting Bank" via the Automated Clearing House, which is owned and operated by the Kenya Bankers Association.

Previously the old clearing cycle gave the banks two business days to clear the cheques via the Automated Clearing House. Awori also thanked stakeholders for collaborating with the KBA to improve the standards and efficiency of the banking industry. The initiative is the result of collaboration between commercial banks and the Central Bank of Kenya and forms part of reforms being implemented in the National Payment System," he added. Awori appreciated the partnership between the regulator and the industry association, saying "The positive development we have witnessed through the Kenyan banking industry is a result of the collaboration between KBA and Central Bank, not forgetting the individual banks that make up the KBA membership.

KBA and CBK initiated the cheque truncation project that not only saw the introduction of a new, more secure cheque format, but also introduced the automation of the cheque clearing process. Contrary to the physical exchange of cheques by banks up until , banks today 'exchange' cheques electronically using the image of the cheque and associated information.

The move has contributed majorly to significant reduction in cheque-related fraud as well as increase the efficiency and accuracy in making cheque payments. The new cheque processing timelines affect all cheques denominated in Kenyan Shillings drawn on banks in Kenya and exchanged at the Automated Clearing House.

There will be no changes in the clearing process for foreign cheques drawn on banks out of Kenya.