Currently, for a cheque to be handled by the clearinghouse, it must not exceed 20 million Shillings if it is a Uganda Shilling cheque, or it’s equivalent if the cheque is in another currency. This value limit has now been reduced by half, and these changes will take effect July 17, 2022, when the clearinghouse will no longer accept to handle checks of value beyond 10 million Shillings.
In another step towards moving away from cheques as a means of settling transactions, the banking institutions under the Automated Clearinghouse of Uganda have decided to reduce the value limits of cheques to be handled by the clearinghouse.
A clearinghouse is an intermediary or middleman arrangement that facilitates the finalisation of a transaction that involved a check or credit or debit card and therefore validate the transactions. The responsibilities of a clearinghouse include finalizing trades, settling trading accounts, collecting margin payments, regulating delivery of the assets to their new owners, and reporting trading data.
In acting as a middleman, the clearinghouse provides the security and efficiency that is integral to stability in a financial market.
Currently, for a cheque to be handled by the clearinghouse, it must not exceed 20 million Shillings if it is a Uganda Shilling cheque, or it’s equivalent if the cheque is in another currency. This value limit has now been reduced by half, and these changes will take effect July 17, 2022, when the clearinghouse will no longer accept to handle checks of value beyond 10 million Shillings.
The Dollar cheque new limit will be 2,750, while the Euro’s new limit is 2,250. The bankers have also limited the value of the British Pound to 2,200 and the Kenyan currency at Kshs 300,000. Implementation of this move will last six months, the cheque stale period under the laws.
The notice to the member banks was issued after the Uganda Bankers Association did not object to the changes, which are in line with the Uganda Clearinghouse Rules and Procedures.
The rule states: The Clearing House Committee shall, with the approval of UBA and BOU, review the cheque value limits and currencies to be exchanged in the Clearing House from time to time and issue a circular to the Participants communicating the revised cheque value limits and currencies to be exchanged in the Clearing House.
Why the reductions in value limits?
The banking industry in Uganda has been devising ways of shifting the economy away from physical […]
