Central bank postpones deadline for use of electronic cheque till fiscal year end
As the central bank has postponed use of electronic cheque till mid-July, the banks and financial institutions that are the members of the Nepal Clearing House Ltd (NCHL) are mandated to use electronic cheque clearance (ECC) service from the start of the next fiscal year.
Differing the earlier deadline, the central bank has directed the banks to issue electronically readable standard cheques by the end of the current fiscal year.
This is the second postponement as earlier in October, postponing the earlier deadline, the central bank had asked the banks to start use of machine-readable cheques by mid-January, 2014.
In April 2013, the central bank had for the first time directed the banks and financial institutions to start using the fixed mid-July, 2013.
The banks and financial institutions have to issue new cheques according to Cheques Standards and Specifications Guidelines 2011 – instead of current ordinary cheques – to make the cheques compatible for electronic clearing.
The standard cheques will have a character recognition technology that will help facilitate the processing of cheques and will have the routing number and account number at the bottom of a cheque.
Though, Nepal Clearing House started electronically clearing Nepali currency cheques from April 2012, with Automatic Check Truncation and clearing systems with the current normal cheques, it still has not been able to make all the banks and financial institutions its members.
"NCHL-ECC is an image-based, cost-effective, magnetic ink character recognition (MICR) cheque processing and settlement solution, where an original paper cheque is converted into an image for electronic processing of the financial transactions between participating member banks and financial institutions," according to NHCL. "The physical movement of the cheques are truncated or stopped at the presenting bank and the cheques' images are electronically moved between the presenting and paying banks resulting in a faster and easier processing of the cheque transactions.