Kampala. Banks under Uganda Bankers Association (UBA) have given customers up to July 1 as the deadline on which they should have obtained new cheque books that are compatible with new regulations.
Speaking at the weekend, Mr Wilbrod Owor, the UBA executive director, told Daily Monitor that bank customers who possess old cheque books have only or less than two weeks to obtain new ones.
“The old cheques will not be cleared. Customers will have to get new cheques. It is like a normal migration. We have to migrate,” he said, adding there will not be no other alternatives.
UBA last week issued a notice indicating that effective July 1, cheques, which do not meet certain standards, will not be cleared.
The new cheque books, Mr Owor said, must be compatible with the new automatic cheque clearing system, which was introduced by the Central Bank last year.
The notice indicated that Bank of Uganda, through different tests, had found that there were still non-compatible cheque leaves circulating in the banking system.
In 2018, the Central Bank started implementing the automated clearing house system, which eliminated moving of physical cheques between banks and across branches.
The new system also seeks to reduce cheque clearing time from four to two working days.
Mr Owor said they had undertaken a project called the Automated Clearing House to speed up cheque clearing, adding that what used to take four days would be shortened to two before eventually coming down to under a day.
Mr Everest Kayondo, the Kampala City Traders Association chairman, said reforms are cumbersome to customers wondering who will bear the cost of the new cheque books.
“It is something very important. You might get a cheque book and next thing you know your account has been debited. It is important to understand who caters for the cost,” he said.
How it will work
Banks will scan the cheques using an electronic system and the images will be remitted to the Bank of Uganda clearing house.
However, the old system of writing the cheques will continue because the electronic system only applies to the bank’s back end.
Recalling old cheques, Mr Owor said, has been necessitated because they don’t have the new security features that are required at the clearing stage.
“Those cheques must have security features which scanners can read automatically,” he said without revealing the security features, adding that banks have been engaging customers and provided a window period to phase out the cheques.
Asked how banks have been operating with the old cheques and new system since 2018, he said there has been semi manual approach to clearing cheques which meant reconciling some features manually, a system that had to come to an end.