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New CBK rule on cheques
FundamentAli
#1 Posted : Friday, October 09, 2009 11:21:00 AM
Rank: Veteran

Joined: 11/4/2008
Posts: 1,289
Location: Nairobi
There is a new rule which discontinues issuance of all cheque of Shs. 1 million or more. This rule has greatly inconvinienced some of us. I am in the middle of some transaction and neither my lawyer nor my bank can give me any directions on how they can give an undetaking. I think CBK should have spent sometime on educating bankers and lawyers.

Baada ya dhiki,faaraja
kingfisher
#2 Posted : Friday, October 09, 2009 11:38:00 AM
Rank: Elder

Joined: 4/9/2008
Posts: 2,824
be inovative,at least for now....issue multiple cheques...thats the only way left for now though it might be a bit costly(charges) depending on your bank. but let that stupid rule not stop you from doing business

If you have money that you expect to start using in five years,it now belongs in stocks.
When I have money, I get rid of it quickly, lest it find a way into my heart.
Kamaa
#3 Posted : Friday, October 09, 2009 12:06:00 PM
Rank: Veteran

Joined: 10/6/2007
Posts: 1,177
Location: Nairobi - Kenya
i second @ kingfisher

break cheques into smaller values not exceeding 1M...

i.e if making a payment of 1.5M,write 2 cheques @ 750K and you avoid the bank charges...

When you run so fast to get somewhere,you miss the fun of getting there... Life is not a race,so take it slowly....
When you hear what I say, you will not understand. When you see what I do, you will not comprehend
IDP
#4 Posted : Friday, October 09, 2009 12:27:00 PM
Rank: Member

Joined: 8/26/2009
Posts: 76
Then you wait for 21 days for the cheque to clear. Lets all support value capping. Its already in Uganda and TZ . Our economy has to move a bit faster.
Jangwa la Jangili
#5 Posted : Friday, October 09, 2009 12:53:00 PM
Rank: Member

Joined: 10/9/2009
Posts: 311
value capping is good and is in everyone's best interests. check fraud is at pandemic levels in kenya today. south africa did this a while back too. it is the way to go. the charges might be an issue but the cbk should get more assertive with these white collar shylocks.

Katika Jangwa la Jangili ndipo Pwagu hupata Pwaguzi.
Katika Jangwa la Jangili ndipo Pwagu hupata Pwaguzi.
AlphDoti
#6 Posted : Friday, October 09, 2009 1:36:00 PM
Rank: Elder

Joined: 6/20/2008
Posts: 6,275
Location: Kenya
Do you think this will help discover and catch the allegged 'pirate' money?

AKS
mfisadi
#7 Posted : Friday, October 09, 2009 1:51:00 PM
Rank: Member

Joined: 9/25/2009
Posts: 8
kwani your bank hawana those EFT or RTGS procedures?? that should be much cheaper than spliting the payment to many cheques.
kenyanbeef
#8 Posted : Friday, October 09, 2009 2:55:00 PM
Rank: Member

Joined: 7/24/2009
Posts: 273
The acronym 'RTGS' stands for Real Time Gross Settlement. RTGS system is a funds transfer mechanism where transfer of money takes place from one bank to another on a 'real time' and on 'gross' basis. This is the fastest possible money transfer system through the banking channel. Settlement in 'real time' means payment transaction is not subjected to any waiting period. The transactions are settled as soon as they are processed. 'Gross settlement' means the transaction is settled on one to one basis without bunching with any other transaction.

EFT are electronic fund transfer modes that operate on a deferred net settlement basis which settles transactions in batches. In this,the settlement takes place at a particular point of time. All transactions are held up till that time. For example,say,EFT settlement takes place 6 times a day during the week days (9.00 am,11.00 am,12.00 noon. 13.00 hours,15.00 hours and 17.00 hours) and 3 times during Saturdays (9.00 am,11.00 am and 12.00 noon). Any transaction initiated after a designated settlement time would have to wait till the next designated settlement time. Contrary to this,in RTGS,transactions are processed continuously throughout the RTGS business hours.

...Its quite simple. The usual innate resistance to change makes it difficult to appreciate this as a big step forward for the banking industry.
Intelligentsia
#9 Posted : Friday, October 09, 2009 3:14:00 PM
Rank: Elder

Joined: 10/1/2009
Posts: 2,436
@FundamentAli

Lets embrace this RTGS/ value capping unreservedly. Besides you have no choice. Its now implemented and here to stay. Actually,the KShs 1m cap currently in force is only introductory and this cap will decline further- maybe to 500k and even below so that all payments are settled via RTGS.

In fact,Kenya has lagged behind countries like TZ and Ug which implemented the system in 2004 and 2007 respectively,while Zambia 2007,Senegal and Cote D'Ivoire in 2006. S.A uses SAMOS. In Europe they have the TARGET system that operates across 26 countries.

Its widespread acceptance and use means it possesses self-evident benefits.

With RTGS your funds reach you the same day. It also reduces high-value cheque fraud,minimises a whole lot of risks (credit,systemic,settlement,liquidity,etc).

Frankly,I don't know why folks are complaining about about this new system yet they are the same guys who were complaining that it takes 3 working days to clear a cheque. Under RTGS the guys pays you same day. Note RTGS has been in use since 2005!

Imagine if you had a KShs 2m cheque and you have to make urgent payments. Before,you would have had to wait for 3 days for it to clear or negotiate with a bank to get credit against uncleared effects in which case you would be charged Overdraft rates. But now you get your funds same day,at a token fee.

Actual losers are banks because they can no longer trade with the floats they traded with before giving you the credit. And Banks,Central Bank and Kenya Bankers Assoc had put up many adverts in the papers to raise awareness before 1st oct when value capping kicked in.

It will be fully embraced inthe fullness of time.




..there's nothing,absolutely nothing really,that I can't do if I put my mind to it.
Jangwa la Jangili
#10 Posted : Saturday, October 10, 2009 5:47:00 AM
Rank: Member

Joined: 10/9/2009
Posts: 311
kenyanbeef - good points. but arent efts value next day while only rtgs is value same day? and i do not think there is any eft settlement between banks on saturdays. everything done on weekends is effectively transmitted on monday with friday's transactions siyo?

Katika Jangwa la Jangili ndipo Pwagu hupata Pwaguzi.
Katika Jangwa la Jangili ndipo Pwagu hupata Pwaguzi.
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