New law to smooth clearance of cheques
A bill to streamline the clearance of cheques through the banking system and to promote cross-border joint cheque clearing has been introduced into the Legislative Council.
The draft legislation would enable cheques to be cleared through the
transfer of
'electronic information' by means of cheque imaging and truncation.
"This would improve cheque clearing efficiency and security, as well as lower the cost of cheque clearing and settlement," the Secretary for Financial Services and the Treasury, Mr Frederick Ma, said today (February 19) in moving the second reading of the Bills of Exchange (Amendment) Bill 2003.
"The new system could also facilitate Hong Kong's efforts in promoting cross-border joint cheque clearing, which relies on the transport of physical cheques back to Hong Kong for clearing.
"Cheque imaging and truncation could also allow joint cheque clearing to be done over a longer distance and not be confined to neighbouring regions."
Mr Ma said the principal amendments would enable a cheque to be presented by a banker for payment by notification of certain information relating to the cheque by electronic means, rather than by physical presentation.
Under the present system, cheques have to be submitted in physical form for clearing through a cheque clearing system operated by Hong Kong Interbank Clearing Limited (HKICL) for all licensed banks.
Advances in banking technology enable cheques to be cleared by transferring the electronic cheque images and data to the paying banks through cheque imaging and truncation.
With the new system, the physical cheques remain with the collecting banks, or with HKICL if the collecting bank has commissioned Hong Kong Clearing to do the imaging on its behalf.
Mr Ma said that in the early stages of implementation, banks would only clear cheques below the amount of HK$20,000 by means of cheque imaging and truncation. This amount could be reviewed periodically by the Hong Kong Association of Banks.
End/Wednesday, February 19, 2003
