CBN Governor, Sanusi Lamido Sanusi
By Obinna Chima
The Central Bank of Nigeria (CBN) has said that it would fully implement the cheque truncation system in the banking industry by July this year.
Director, Banking and Payment System Department, CBN, Mr. Dipo Fatokun, disclosed this in a chat with newsmen during a stakeholders’ forum on Cheque Truncation organised by the CBN in Lagos at the weekend.
He said that a July 6, 2012, date had been fixed for the implementation of the policy.
Cheque truncation is a process that involves stopping the physical movement of the cheque and replacing the physical instrument with the image of the instrument and the corresponding data contained in magnetic ink character recognition (MICR) line. The pilot phase of the policy commenced in Lagos last August.
He restated that the policy would lead to a reduction in the clearing period for cheques.
“Instead of T+2 before you get value for your transactions, you get T+1 with cheque truncation. You know when you talk of money, time is very important. So, that one-day reduction in the clearing cycle makes a lot of difference,” he added.
According to him, the policy would facilitate the CBN’s cash-less policy, saying that since the usage of cheques is one of the alternative payment channels which the CBN is encouraging, there was need to reduce the clearing cycle.
“So instead of you carrying cheque around, you pay in cheque into your account. And if you want to make payment, you use cheque, but based on the limit which is N10 million. So, cheque truncation is an integral part of the cash-less policy,” he explained.
Commenting on the possible challenges that the policy may face, he said:
“We need hardware to be able to present it. Then we need enlightenment on the part of those that are to participate in the programme. The onus of responsibility falls on the bank that is presenting the cheque. So those are some of the challenges that have to be addressed and which the CBN is actually addressing.
“And of course, in order to address the risk, the CBN would be visiting the banks with the Working Group and the Nigerian Interbank Settlement System (NIBSS) to ensure that everything in place and to mitigate the risks that could arise from the implementation of the cheque truncation policy,” he said.
In his presentation, the Acting CEO NIBSS, Mr. Niyi Ajao, also said that the cheque truncation policy would bring about the best clearing system in the country.