In collaboration with the West Africa Monetary Institute under the West African Monetary Zone Monetary Integration Programme, the Central Bank of The Gambia (CBG) has embarked on the modernization of the country’s payments, clearing and settlement system infrastructure, which is part of a regional payments system initiative and forms an integral part of the prerequisites for effective West African monetary integration.
In this edition we continue our publication on its recently published brochure on the aforementioned subject, which also throws more light on frequently asked questions about the modernised payments system, especially on the aspect of its Cheque Imaging System.
What is the Cheque Imaging System in the context of clearing?
The Cheque Imaging System (or CIS) involves the physical movement of cheque images electronically, which will stop at some point in the clearing cycle, either at the level of the presenting bank or at the clearing house or even at the drawee bank.
In the context of CIS being implemented in The Gambia, the cheque image would be digitally processed at the level of the presenting bank. In other words, the cheque will not physically travel to the clearing house (at Central Bank of The Gambia) or to the drawee as it did hitherto. Nonetheless, the existing laws, namely the Banking Act 2009 and the Central Bank Act 2005 mandate the Central Bank of The Gambia to ensure a fully operational as well as safe and sound payments system. There is no single ideal way in which the legal framework should be organised. Central Bank has power to issue regulations to govern the operation of the systems which have statutory backing. This together with Participants Agreements will provide adequate legal foundation for the CIS. The new system is a legal process which merely replaces the physical exchange of cheques with electronic images but where challenged, the original cheque can always serve as further evidence of transaction.
How are the Images captured?
The electronic images and MICR data of cheques are captured using scanners. The MICR data complies with the MICR code as defined by the West African Monetary Zone (WAMZ) Cheque Standards. All cheques are required to be branded with bank’s special crossing stamp prior to scanning. The amount field needs to be keyed in. The scanner will print an endorsement at the back which is a unique identifier for the instrument [i.e. date of presentation, the clearing type, item sequence number, MICR code of the drawee bank, CBG issued Code of the presenting bank/branch, etc.
What happens to the physical cheques?
It is mandatory for the presenting banks to store the physical instruments safely. In case needed, the physical cheques could be retrieved from the presenting bank through the drawee bank. The participating banks may surrender cheques to the drawee bank in accordance with an agreement, if one exists.
How is CIS being implemented in The Gambia?
The CBG is implementing CIS on a global basis, involving all the thirteen banks in the country. However, all Dalasi-denominated cheques in the country will have to be processed through the CIS. Cheques will be scanned at the presenting bank level and only the cheque images plus the associated data file would flow to the drawee banks/ branches through the CBG Clearing House. The settlement would be effected by the Clearing House based on the MICR date.
How is the uniqueness of cheques assured?
The images captured at the presenting bank level would be transformed to the drawee banks/branches via digital signatures of the presenting bank. The CBG has issued an area and bank/branch code to each of the participants, whilst customer cheques are personalised to prevent overlaps.
How is the quality of the images ensured?
As payment will be made based on the images, it is essential to ensure that good quality images are available for processing. For this purpose, the CBG has prescribed the image standards to member banks. The CIS solution also provides for Image Quality Audit (IQA) at different levels. Further, the drawee bank can call for the physical instruments if it is not satisfied with the image for payment processing.
What care and precautions are to be taken by the banks and their customers to ensure quality images?
All cheques need to be image friendly. The customers should preferably use dark coloured ink while drawing the instruments. Care should be exercised in the use of rubber stamps, so that it would not interfere with the material sections of the cheque. The date of the cheque, payee’s name, amount and signature are the basic features which are essential in a cheque. The use of rubber stamps, etc., should not overshadow the clear appearance of these basic features in the image. In order to ensure that all essential elements of a cheque are captured in an image during the scanning process, bank customers also need to exercise appropriate care when drawing cheques.
What are the settlement schedules?
The National Payments Systems will operate on each business day of the week (excluding Saturdays, Sundays and public holidays). The settlement schedules decided by CBG are as follows: CIS {ACP/ACH} (Presentation - 8.00 am to 3.45 pm), RTGS (Operation - 8.00 am to 3.45 pm), and SSS (Operation - 8.00 am to 12.00 pm on Auction Day).
Cheques can be processed during business hours and beyond the cut-off time of the CIS. Settlement will only take place the following business day. The settlement schedules may be amended prior to the scheduled go live and may impact on the current banking hours. A major consideration in arriving at the final schedule is its feasibility and convenience of the public.
Are the systems secure and is availability assured?
CBG has established an architecture that will ensure continuity. The Primary site provides for a redundancy of systems servers that will make it possible to continue business in the event of some failure. A secondary site which is online allowing for replication of transactions on a real-time basis is also operational. This means that the systems can be operated from this alternative site if need be. The secondary site also acts as data backup. In addition, the communication network is dedicated to the system to ensure security.
