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November 27, 2012

TBA: Cheques To Be Encashed In Foreign Banks Within 4 Hours

Bank customers have been assured that they can encash cheques in foreign banks within four hours only or less after the deployment of a payment switch that facilitates the processing cheque transactions.

Speaking to The Guardian in an exclusive interview at the weekend, Tanzania Bankers Association (TBA) chairman Lawrence Mafuru, said the presence of the payment switch remains an issue in the developing world where technology is still an impediment.

“We are yet to have a payment switch, a technology that quickens payments at a shorter period of time. So in order to have cheques processed in four hours or less we need to have it reflected in banks by ensuring that all cheque clearing activities are migrated to the national payment switch,” Mafuru said.

He noted that at the moment the Bank of Tanzania (BoT) is running the project whereby it is in the process of deploying a national switch which will facilitate payments timely nationally.

He said in the last two years the Bank of Tanzania (BoT) introduced a regulation demanding that all payments above 10m/- should be done through the Tanzania Inter-bank Settlement System (TISS), to facilitate timely payments because the method is much quicker.

Under this system payments can be made within two hours of checque submission, he said, adding that at the moment it is advisable that customers use TISS because they are not necessarily obliged to use cheques and there is no restriction on the amount of money involved in payment.

Unfortunately, according to him, most businesspersons prefer the current payment system which takes two to four working days for their money to be posted to their accounts because they prefer to use the cash before paying it to a bank.

Commenting on the performance trend of the banking system in the country since liberalisation in the 1990’s, he said, banks have been performing very well because the regulator has improved the regulatory environment.

The banker of all banks (BoT), he said, has made sure that banks are well capitalised and are operated more prudentially.
Only one bank, Meridian Biao, collapsed since liberalisation was effected over the past twenty years, he said.

After liberalisation the bank industry has become profitable with the major challenge at the moment being the increase in non-performing loans, he said.

“One would expect this because after the global financial crisis in 2008/09 many customers suffered and most of them have not been able to recover well. In the process they have kept pressure in the banks’ performance in terms of non-performing loans. But the overall picture of bank performance trend is really good and that is why more banks are coming to the country because of the prevailing opportunity for growth,” he said.

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