BSP gives banks more time to upgrade clearing systems
THE BANGKO SENTRAL ng Pilipinas (BSP) has given more time for banks to upgrade their systems for the one-day check clearing process, which comes two months since the digital scheme went live in January.
Banks operating in the Philippines now have until April 21 to comply with the check image clearing system (CICS), a month later than the original March deadline set by the regulator. The extension was granted through Memorandum M- 2017- 010 signed by BSP Deputy Governor Nestor A. Espenilla, Jr.
Launched last Jan. 20, the CICS targets to trim check processing time to a day from the previous stretch of three to five banking days.
The process requires banks to accept digital images of checks as authority to credit, versus the old practice of carrying the physical checks from one branch to another before any fund transfers are made.
To allow faster clearing, banks need to upgrade their computer systems and feedback channels in accordance with the new guidelines set by the Philippine Clearing House Corp. ( PCHC), the private firm tapped by lenders in processing all check issuances in the country.
Banks must also issue new checks to its clients, which would carry “embedded” security features that would be readable under the electronic clearing software.
Banks process an average of 700,000 checks daily, but may hit up to 1.4 million during peak days, industry officials have said.
Mr. Espenilla said the rollout of the CICS went “relatively smooth” during its first month, but not all banks were able to immediately comply with the technical requirements set by the PCHC.
As of March 17, 68 banks have been able to fully comply with the new standards for digital check clearing, according to a list published on the PCHC’s Web Site.
There are 613 banks operating in the Philippines as of end- September 2016, according to central bank data. Of the number, 41 are universal and commercial banks, 64 are thrift banks, and 508 are rural and cooperative banks.
The one-day clearing system is expected to provide faster access to funds for both consumers and businesses, which could help boost economic activity. The regulator is looking to move towards same-day clearing in the future.
Mr. Espenilla previously said that the planned National Retail Payments System is also being drafted to facilitate quicker fund transfers across the country, with digital platforms eyed for realtime credit and settlement.
The BSP is working to forge agreements with banks and other financial players in the Philippines in order to roll out the system, as the central bank looks to raise the share of digital payments to a fifth of total transactions by 2020.