Image cheque clearing system for all banks

 

The UAE said yesterday it would begin enforcing a more secure image cheque-clearing system (ICCS) in July after a successful trial of one year.

The Central Bank told the country's 23 national banks and 28 foreign institutions they must implement the

system , which involves scanning of cheques by branches of all banks and sending them to their headquarters, which in turn will send all the imaged cheques to the Central Bank.

In a statement published yesterday, the Central Bank said the existing automated cheque clearing system (ACCS) would be abolished in October and that banks which can not meet the deadline could enforce ICCS through other banks connected to the new system.

"After success of the parallel running of ICCS and the existing automated system, which was conducted with a group of banks over the period from October 21, 2007 to January 31, 2008, the Central Bank has decided to proceed with live operation of the system with effect from July 1," it said.

Under the rules, cheques deposited by bank customers will be scanned by branches of all banks and sent to their headquarters or regional office for foreign banks.

Each office will then send total banks' imaged cheques to the Central Bank ICCS. If some banks do not have a central system, then they should authorise their branches to send imaged cheques directly to the Central Bank.

"Payment by banks will be made against their accounts holder's cheque images, if funds are available and no discrepancies are noticed. If discrepancies are noticed these have to be described accurately. Original cheques once imaged will be sorted within the premises of the concerned bank and sent to issuing banks within five days directly from the presenting bank," the statement said. "At issuing banks, received original cheques will be verified for forgery discrepancies and the issuing bank will have 30 days to claim against the concerned presenting bank."

The statement added that the decision of the Central Bank would be binding on both the issuing bank and the presenting bank, but added that both parties would have the right to go for legal process if one chooses so. The statement provided other details of the new system, which also involves writing the word "cheque" in thermochromic ink, which it said disappears when exposed to a little temperature increase, then reappears once again on cooling.

"It will be necessary for banks to ensure their technical and administrative readiness to connect to the new system by June 20, 2008 and to go live on July 1, 2008," the statement said.

"The existing Automated Cheque Clearing System (ACCS) will be scrapped by October 31, 2008, which will be used as a contingency system after the commencement of the new system."

The UAE, the second largest Arab economy after Saudi Arabia and one of the biggest financial centres in the Middle East, has recorded sharp increases in the issuance of cheques over the past few years.

Central Bank figures showed the number of cleared cheques grew from around 20,350 in 2005 to 21,890 in 2006. They totalled around 15,870 in the first nine months of 2007. At the end of last March, 51 banks operated in the UAE with a total of 770 branches.