Freeman Cebu Business

Cebu bankers welcome move to ease check clearing system

Carlo S. Lorenciana - The Freeman

CEBU, Philippines - The Cebu Bankers Club welcomes the move to ease the check clearing process in the banking system.

By 2017, the banking public can expect the check clearing process in just one day as the Bangko Sentral ng Pilipinas and the Philippine Clearing House Corp. signed an agreement Tuesday to implement the check imaging clearing system (CICS).

"The move is beneficial to the banking public and would promote immediate availability of funds and increase money in circulation the following day instead of waiting for three to five days," CBC President Maximo Eleccion told The FREEMAN.

"The banks are on track with our preparations, starting this year we do not anymore accept checks with alteration," he said.

In a speech at the signing of the memorandum of agreement, BSP Governor Amando Tetangco Jr. said that checks are targeted to be cleared in a fully electronic environment starting January 6, 2017 through the CICS.

"Simply put, we are moving from physical clearing of paper checks to a system that digitizes those same paper checks to facilitate their electronic clearing," Tetangco said, citing the adoption of check truncation technology.

The BSP recognizes that cheques will probably continue to play an important role in the country's payment system for the foreseeable future. But it needs to evolve and leverage on technology to improve its efficiency as a payment tool.

 PCHC processes an average 700,000 checks every day with an average value of P135 billion. PCHC has more than 5,600 participating bank branches nationwide.

"Certainly, that is an unthinkable amount of cash to be carrying around for bilateral and physical settlement if a check clearing system was not in place," Tetangco said.

BSP said clearing checks in a physical manner necessitates a clearing cycle that is typically two to three days long and that not every financial institution is a direct clearing participant.

The electronic transmission of cheque data will also eliminate the risks on transporting physical checks. 

The country's payment challenge goes beyond the issues associated with checks, BSP said.

In a 2014 study by the Better than Cash Alliance, only 1 percent of monthly retail transactions in the country are done in electronic form, showing the country's reliance on cash and checks in doing business. (FREEMAN)

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