Cheque payments for over Sh1m stopped

MaxShimba · 2009-10-02T16:53:25+00:00

Cheque payments for over Sh1m stopped By NATION Reporter October 1 2009 Business transactions are now expected to move three days faster, with the implementation of the rule requiring payments of over Sh1 million to be effected through a non-cheque payment system. The Government will also be a key beneficiary of this move, as it will help curb cheque fraud said to be rampant in its payment system. But as the transactions gain speed, the business community will have to devise new ways of operating without the cheque, which has previously been used as a symbol of sealing deals and guarantee for future payments. We have come out of the cheque payment system and it is upon the business community to agree on what next, Mr Fedelis Muia, project manager, said adding that the new payment has taken off well. Under the new rule, all payments of Sh1 million and above, will be made through the Real Time Gross Settlement (RTGS), an electronic clearing system that deposits money directly into the recipient account. Worst hit The governments payment system has been said to be worst hit by cheque fraud. The new system requires customers to give instructions to their banks instead of writing cheques. In return, the banks effect such payment directly to the account of the recipient electronically, thus reducing the level of human intervention and by extension fraud. The limitation on use of cheques will also apply to cheque payment of foreign currency whose value exceeds 35,000 dollars, 15,000 pounds and 30,000 Euros. But it is the exit of postdated cheques, which were used as guarantee for future payment, that is causing anxiety in the market. However, experts say it could be replaced by a promissory note.

Thread starter MaxShimba
Start date Oct 2, 2009

MaxShimba

JF-Expert Member

Oct 2, 2009

MaxShimba

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Oct 8, 2009

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