(Daily Observer)--In collaboration with the West African
Monetary Institute under the West African Monetary Zone Monetary
Integration Programme, the Central Bank of The Gambia has embarked on
the modernization of the country’s payments, clearing and settlement
system infrastructure.
The development is part of a
regional payments system initiative and forms an integral part of the
prerequisites for effective West African monetary integration. This
revelation was made by the governor of The Central Bank, Amadou Colley
on Tuesday November 2011 during a briefing of stakeholders at the bank’s
board room, to expose them to the new automated cheque processing
(ACP/ACH) and the Real Time Gross settlement System (RTGS).
According
governor Colley, the initiative is also part of the Central Bank’s
strategic vision of modernizing the payments and settlement system into a
world class standard, comparable to the rest of the world. The system
will lower costs, make payments and settlements more accurate and pave
the way for increased financial innovations in the country.
The
process spans across different facets and include the establishment of
the Real Time Gross Settlement System (RTGS), the Automated Cheque
Processing/Automated Clearing House (ACP/ACH), Securities Settlement
System (SSS) and an electronic National Switch for retail payments.
The
rationale for the projects is justified by the fact that: The Gambia
remains a cash based economy, with payments of large value transactions
requiring heavy movement of cash and its attendant risks; the continued
dependence on cash payments also results to delays in cheque processing
and inefficiency; and the cost of printing currency is quite high, thus
the substitution of banknotes in favour of plastic cards under the
National Switch project seeks to alleviate this problem.
He added
that the Central Bank currently operates a manual cheque clearing
system, where commercial banks meet to physically exchange cheques and
net balances settled through their current accounts held with the
Central Bank, which is time consuming and less efficient in detecting
cheque frauds; the delay in confirmation of customer balances due to the
lack of real time gross settlement systems results to the acceptance of
cheques, which would otherwise be rejected outright.
Some of
these cheques turn out to be dishonored due to various reasons; and The
Gambia has registered significant progress in her socio-economic
development, with growth rates of GDP averaging between 5 to 6 percent
per annum. These gains will be consolidated through the modernization of
the payments system and the creation of a conducive environment for
further growth.
The systems when fully functional, he asserted
will help the Bank achieve among other objectives, eliminate or
minimize risks associated with payments, clearing and settlement system,
eliminate float size for individual customers and banks as well as
significantly reduce the float time for cheque clearance, with the
possibility of reducing the clearance time from five days to one day in
addition to combating fraud and forgery, pave way for reducing high case
intensity and gradual migration to high usage of electronic modes of
payment, and bring efficiency to Government receipts and payments and
all other consumers and leverage them for financial deepening of the
economy.
It will also ensure compliance with international
principles and standards, especially the core principles for the
Systematically Important Payments Systems (SIPS) of the Bank for
International Settlement (BIS) and enhance the Central Bank’s monetary
management capabilities.
Cheque Imaging System
Explaining the
teachniques behind the projects, the central bank boss noted that in
their quest to ensure the realization of Government’s vision 2020, the
Central Bank wishes to harness technology to its advantage and the rest
of the financial system. He said the applicable technology in the field
of finance enables the elimination of heavy dependence on physical
movement of cheques for clearing purposes.
It presents the
fastest and most secure mode for clearing cheques through digital means
and replaces the physical exchange of cheques between the presenting and
paying banks. However, the effectiveness of the system depends largely
on how users handle cheques.
He further revealed that the Central
Bank will soon embark on a sensitization geared towards educating the
public on the up-coming projects and the importance of careful handling
of cheques.
He also seized the opportunity to inform the
general public that under the new system, all cheques payable through
our banking system shall be in compliance with specific characteristics,
critical among which is the Magnetic Ink Character Recognition (MICR)
code.
The MICR represents a unique code which is inscribed on
each cheque leaf and forms the basis of electronic processing. Once the
cheque passes through a scanner, an image is generated, which passes
through the system electronically for timely confirmation of customer
balances and the immediate payment of beneficiaries where applicable.
However,
the scanner cannot capture images of damaged cheques, which may result
to processing failure. Cheques, he emphasized may be damaged through,
writing on the MICR code area, folding of cheques in a form which may
prevent its passage through the scanning machine, soiling of cheques
with oils, paints or other permanent marks, wear and tear of cheques due
to poor storage facilities, stapling of cheques, forgeries aimed at
defrauding the system among others.
Governor Colley conduced that
all banks are adequately equipped with the means for the implementation
of the new measures; and solicits the cooperation of the public in
ensuring full implementation of the new payments system projects, which
will contribute a long way towards the development of our country.
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