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NBC wants tighter rein on bad cheques

The central bank has urged banks operating in the Kingdom to comply with the stipulated reporting standards on bad cheques.

In a circular issued yesterday, the National Bank of Cambodia (NBC) asked banks to ensure that their staff was aware of the regulations set in the 2005 Law on Negotiable Instruments and Payment Transactions, and urged them to inform their customers about issuing cheques correctly.

“All banks need to instruct customers clearly about the terms and procedures of issuing and using cheques,” the circular read. “Banks also need to record and report back to the NBC within two days in the case that there is not enough balance.”

Ly Thay, senior vice president and head of operations at Acleda Bank, said currently the reporting of bad cheques was a two-step process.

This entailed the collection of cheques from other banks, and then checking whether there was sufficient balance in the issuer’s account to make the payment, after which a daily report was sent to the NBC listing “bad payments”.

While there were many possible reasons for a bad cheque, such as a bogus or damaged cheque, the NBC is urging banks to issue a daily report only on cheques written with insufficient funds in the issuer’s account.

“The NBC’s letter focuses on telling all banks to have one specific report for [cheques issued with] insufficient funds only,” Thay said.

He added that while the individual banks were in charge of dealing with these bad payments, the NBC had to be notified of them, given that it could penalise the issuer of the cheque.

The penalties for riel- and dollar-denominated cheques issued with insufficient funds are $2.5 and $5, respectively.

Grant Knuckey, CEO at ANZ Royal Bank, said the notice was a reinforcement of existing procedures, as the NBC wants all banks to use a consistent practice to report these cases.

“I do not believe there has been any increase in the quantity of bounced cheques,” he said. “It is simply that banks have adopted varying practices on how they deal with returned cheques.”

Knuckey said there was a “high usage of cheques” in Cambodia, given the still-low use of electronic payment options. “There is also the common use of post-dated cheques as a form of payment promise,” he added.

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