Savithar Chiarapong
Analyst
Payment and Debt Instruments Department
The cheque clearing system of Thailand will move to the new chapter after the launching of the Imaged Cheque Clearing and Archive System (ICAS) on early November this year. The implementation of this new system will enable the cheque clearing process to be more efficient in terms of operational procedures among clearing house members and all parties concerned.
To ensure smooth implementation, on 26 September 2011, the Bank of Thailand (BOT) held a clarification meeting for member banks in cheque clearing system regarding the rules and regulations of ICAS, as well as the preparation processes in implementing the new system.
As the ICAS is based on cheque images which will be sent on-line, the rules and regulations are set to ensure safe and reliable capturing and transmitting procedures. Despite the solid legal ground of Electronic Transactions Act, the rights and responsibilities of depository banks and paying banks are also clearly defined in the BOT’s rules and regulations, which were enacted on 16 September 2011. This allows all member banks to set themselves ready for the implementation of the ICAS within this year.
The BOT also requires member banks to test their systems at both primary sites and backup sites. Recently, all-round process testing was conducted in order to assess the readiness of systems and operators for both member banks and the BOT. The overall results of system functionality and performance are satisfactory.
The BOT expects that the implementation of ICAS will lead cheque clearing process to be more efficient in the near terms. The duration for cheque clearing system for instance will be shorten to only one day, as oppose to the current 3-5 business days for cheque clearing between different clearing zones.
With ICAS, the process of exchanging physical cheques between depository banks and paying banks for verification is eliminated. When the ICAS is fully implemented throughout the country, fund will be available to customers’ accounts within one business day. Therefore, it is necessary for cheque drawers to prepare sufficient fund in their current account on payment date.
For cheque bearers, they can deposit cheques at depository banks as usual. Nevertheless, some practices might be different from the current cheque clearing process. For example, in the case of returned cheque, instead of obtaining only physical cheque and cheque returned form from paying bank, cheque bearer will receive physical cheque, cheque return advice and debit slip from depository bank. These documents can be used in legal case.
The ICAS is planned to firstly implement in Bangkok and metropolitan areas on 11 November 2011. There is a migration period of around three months for all bank branches in this area to transfer to ICAS. Upon this deployment process, the member banks can arrange their own migration plans with consultation from the BOT. For country-wide implementation, the schedule will start by the 2nd quarter of the year 2012.
The successful implementation of the ICAS would have a great impact on Thailand’s financial landscape. This new clearing system will become a major financial infrastructure enabling more rapid flows of funds for the country in the period ahead.
The views expressed are the author's own. Published in the Nation on Monday, October 17, 2011 Source: Bank of Thailand