Stakeholders applaud new cheque clearance system

The government directive to financial institutions restricting settlement of cheques whose value exceeds 10m/-, beyond which the cheque must be settled electronically, has been hailed by bank experts saying it would curb cheque fraud in the country.

The Bank of Tanzania (BoT) recently issued a directive that from March 1, this year, clearance of all bank cheques whose value exceeds 10m/- should be done through electronic transfer using a system called Tanzania Interbank Settlement System (TISS) operated by BoT.

Speaking in Dar es Salaam on Wednesday, Bank M chairman and shareholder Nimrod Mkono said the government decision came as good news to the banking industry since it would put a stop to rampant frauds that had been associated with paper cheques.

The bank had decided to prepare client gathering to educate them and respond to their queries on the advantage and disadvantages of the new system, and its implications in their daily business undertakings.

``A paper-based clearing system of cheques that Tanzanian banks have been using to settle clients\' monies is prone to fraud, and migration to the new electronic money settlement system is a relief to both bank clients and the Tanzania banking industry,`` he said.

Introduction of the system was said to be in preparation for the member states in regional economic groupings such as East African Community, Southern African Development Community (SADC) and others to have a single payment system which was less prone to fraud.

Explaining how the system worked, Mkono said once a client had filled in the form the account, branch and name of the payee, the information would automatically be transferred to the BoT, and settlement would be done within a very short time.

He said the system was free from fraud because there were no human interventions in the entire process, thus making it safer.

* SOURCE: Guardian