Half a billion worth of cheques bounce daily

Central Bank highlights stakeholder responsibilities and precautions

Over a half a billion worth of cheques bounce or get returned daily the Central Bank announced this week to reinforce the need for all stakeholders to take responsibilities and precautions.

The cheque is the most popular payment instrument other than cash known to the general public. Owing to its wide usage, an average customer of a bank is conversant with the payment and receipt of money through cheques and its clearing and settlement process.

“Out of the total number of cheques (190,582) presented daily for clearing at LankaClear Pvt. Ltd. about 10,704 (5.6%) are returned unpaid. The total value of such returned cheques in a day is substantial, amounting to about Rs. 552 million,” the Bank said.

It noted that the volume of cheque returns in Sri Lanka is high by international standards and it has serious implications on the public confidence of cheques as a means of payment.

It was in this context that the Central Bank has decided to provide relevant information for the awareness of the general public and banks of their basic responsibilities and the precautions each party needs to take in using cheques for day-to-day business transactions.

The Bank said that stakeholders of the payment and clearing systems are now exploring the possibilities to strengthen legal provisions to take action against those who issue invalid cheques. “They are planning to introduce a reporting system for banks to inform cheque return details of their customers to Credit Information Bureau (CRIB),” the Bank said.

“Banks will be able to use such cheque return details in screening customers at the point of opening current accounts. Such measures will help to develop a culture among cheque issuers to ensure the issue of valid cheques, drawees to accept only valid cheques and banks to accommodate trustworthy customers,” the Central Bank added. See Page 3 for the rest of the CB’s statement.