Organized by the Bar Association of Sri Lanka (BASL) in collaboration with the Sri Lanka Judges Institute & Clearing Association of Bankers (CAB), the seminar on Cheque Imaging & Truncation System (CITS) and New Banking Systems was held on 3rd of October at the Kingsbury Hotel.
Among the prestigious participants were K. Kanag-Ishvaran, the President’s Counsel who delivered the seminar’s keynote address, Jonathan Alles, MD/CEO of HNB who was also part of the panel which addressed the audience on the topic of new practices in Banking and what the future holds and the General Manager/CEO of Lanka Clear, Sunimal Weerasooriya who made a detailed presentation under the topic “The Evolution of Cheque Clearing in Sri Lanka” and current issues.
“The unassuming simplicity of the modern cheque belies the centuries worth of legal and operational experimentation that have contributed to its transformation from a Bill of Exchange to its current form. When seen in this perspective it is easy to appreciate the immense contribution of the “cheque” towards the development of negotiable instruments, money transfer and banking as we recognize them today,” said Kanag-Ishvaran PC whilst describing the history of cheque usage.
He further went on to describe the workings of the Cheque Imaging and Truncation System in this way; “The Cheque Imaging & Truncation System is designed to accept physical cheques or images and MICR data of physical cheques by direct electronic transfer. Banks generate images of cheques for outward delivery and submit cheque data and images. As such, the physical movement of cheques is truncated at the point of image capture and hence, the paying bank will not receive a physical cheque during the entire clearing process.”
Alles provided the audience with a detailed description of his view on the current developments in the banking industry when it comes to the use of cheques and the extent to which banks perform transactions based on the electronic image of the cheque. “At present cheques are scanned by the banks as per the Lanka Clear specifications and retained within the systems of the bank. Hence the integrity of the cheque images is ensured.
There are certain regions i.e. Europe, Australia etc. that have introduced applications for the customer to scan the cheque by using a smart phone and push to the respective bank for clearing. However, control remains with the paying bank for cheque number matching and signature verification.
Advance payments and cash management systems have more control as banks print the cheques on behalf of the customer and the paying bank will always have a record of the amount, payee, date, value and cheque number of each cheque. This completely eliminates the risks of alteration compared to a standard practice of issuing cheque-books where banks will have no record about the payee, amount and date until the presentment.”
Alles further stated that he expected the legal fraternity “to update the necessary laws and regulations to support Sri Lanka’s digital transformation journey” to aid the promotion of the use the CITS.
In his presentation Weerasooriya named several key benefits the cheque imaging and truncation system offers to customers as well as to banks.
“The originally operated 10 Regional Centers to provide scanning facilities to Banks were discontinued in July 2010 and all banks took over the function of cheque scanning further improving the efficiency of the process” said Weerasooriya whilst explaining the subsequent improvements made to the CITS. He also added, “CRN Printing by LankaClear was discontinued in July 2014 and the Presenting Banks took over the function of CRN printing”.
In conclusion Weerasooriya listed some of the major difficulties faced by Lanka Clear due to the CITS not achieving the awareness and attention required.
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