The director of banking supervision Oabile Mabusa said the system BoB intends to roll out will assist government - as its major customer - to identify discrepancies in the cheque preparation cycle. During a seminar on cheque fraud held in Gaborone last week, Mabusa said that BoB in consultation with commercial banks and government came up with the strategy to clean up cheque fraud in the financial market and minimise incidents, as a way forward.
To pull the financial sector out of the doldrums of cheque fraud and render them a competent means of payment or transfer of value, Mabusa stated that as BoB’s reforms gain momentum within the banking sector, the clearing house aims to introduce cheque truncation. The unique advantage of cheque truncation is that it will eliminate multiple processing of cheques and provide for the retention of the cheque instrument at the first point of capture. As soon as this occurs, clearing will be based entirely upon electronic images.
BoB’s planned Real-Time Gross Settlement System (RGTS) has been designed as a parallel arrangement that will gradually prepare for the inevitable demise of the cheque as the dominant mode of value transfer. The introduction of the RGTS engine complements efforts to improve the security and processing time of clearing cheques since it enables commercial banks to submit payment instructions in “real-time”, with a theoretical zero waiting time. “In the early stages, only large value, credit push payments will be processed through RTGS, but eventually, it will be possible to channel lower value, debit-pull payments generated by clearing houses in different payment streams.”
The banking sector had successfully introduced new cheque instruments over the years to replace the old free form and insecure cheques, which augurs well with BoB’s planned Cheque Documentation Standards (CDS). Modern cheques have the added advantage in that they conform to current security and technological standards that include security printing and the code line for electronic processing, making counterfeiting harder for the common criminal. To sum it up the spawning of this brainchild has inadvertently expedited cheque processing and clearing in commercial banks.
Mabusa said that the establishment of an Automated Clearing House and Electronic Funds Transfer (ACH&EFT) facility has transferred the operation from a manual to automated clearing. The ACH&EFT allows the transfer of electronic clearing data alongside physical cheques, expediting the process of verification and authentication. The clearing house has also adopted standards for electronic payment processing and data exchange across banks for large value items.
Reports from the world’s leading financial houses and accounting firms categorically underscore that cheque fraud is not only confined to Botswana and developing countries but is a universal scourge plaguing financial markets in the developed world as well.
