Once the new system is installed, clearance and settlement of cheques will be performed within seconds
Kathmandu, September 10
With an aim to settle high-value cheque payments in real-time, Nepal Rastra Bank (NRB) is launching a new system — real time gross settlement (RTGS) — from Thursday.
Bam Bahadur Mishra, head of Department of Payment System at NRB, informed that installation of the necessary software and mechanism to make the payment system more efficient had been completed.
At present, the banking institutions take anywhere between a few hours and two days to clear and settle a cheque that is issued by one bank and deposited at another.
Once the new system is installed, clearance and settlement of high-value cheques can be performed within a few seconds.
As per Mishra, the central monetary authority has already inked the agreement with 28 commercial banks for the purpose.
“We plan to ink the agreement with development banks and other financial institutions associated with them as well by December. Thereafter all the financial institutions will come under the RTGS.”
Currently, Nepal Clearing House Ltd (NCHL), a public company established jointly by NRB, banks and financial institutions, among others, is handling all works related to clearing and settlement of cheques, using electronic cheque clearing system.
After the RTGS is fully implemented, customers will even be able to make payments without issuing cheques. As per Mishra, RTGS users will later on be able to fill up a form in their respective bank permitting transfer of funds to the targeted recipient, thereby ridding the need to issue cheques.
While Connect IPS, run by NCHL, has also been providing real-time settlement services, there are some difficulties in settlement of large amounts of money.
Earlier, NRB had announced that settlement of amounts between Rs 200,000 and Rs two million would have to be made through the RTGS or cheque system. The central bank had said that settlement of any amount above Rs two million would have to be mandatorily made through the system.
“Until the system is fully implemented, we are allowing payments through both cheques and RTGS,” Mishra informed, adding that once fully implemented, the liquidity problem will also be resolved as the settled amount will immediately be transferred to the recipient’s account.
Moreover, anyone issuing a cheque or settlement form without sufficient balance in their account and intentionally signing off with a wrong signature will be blacklisted, as per the new directive.
A version of this article appears in print on September 11, 2019 of The Himalayan Times.