Bank of Uganda’s new automated clearing house system to reduce Cheque Clearance to 1-Day

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Bank of Uganda (BoU) is set to roll out operations of a new Automated Clearing System, expediting cheque clearance to two days and eventually a single day.
Effective April 20, 2018, Bank of Uganda (BoU) will begin operation of a new Automated Clearing System. The new system will provide a fully Automated Clearing House with a cheque truncation capability.

Cheque truncation involves exchanging electronic cheque images in the clearing process instead of exchanging actual physical cheques.
“Under the new Automated Clearing System, cheques presented for payment will be scanned by the collecting banks and the resulting high definition images, together with relevant electronic data, will be transmitted electronically to the paying banks through the Clearing House,” said Governor, Prof. Emmanuel Tumusiime-Mutebile in a press statement.

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“This will eliminate the physical movement of cheques between banks and across bank branches, thus speed up the process of cheque clearance, settlement among banks and realization of funds by the beneficiaries.”

Currently, It takes three to four days for a cheque [a for Cheques for different banks] to pass through the clearing system, while some consumers have to wait longer before they can access their money.
The beneficiaries of cheques will therefore receive their funds more rapidly.

Other benefits include a reduction in the costs and risks of cheque clearing involved in cheque clearing.
Officials said electronic clearing is less vulnerable to fraud than manual cheque clearing. The entire country will have access to a single centralized cheque clearing platform as opposed to the current decentralised and unaligned platforms, the bank said.

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