Nepal Rastra Bank has directed all A, B, and C class financial institutions to issue machine-readable chequebooks encoded with Magnetic Ink Character Recognition (MICR), a system that enables banks to reduce operational errors and provide faster service, to all their account holders by October 18.
MICR is a component of Cheque Truncation, an online image-based clearing system that discourages the flow of physical cheques from one branch to the other for clearance. The system automatically reads data like bank code, branch code, bank number and account number after scanning them. The system can automatically read the figures and amounts only if any specific bank adds that feature.
“This will fasten the processing time by reducing the chances of wrong data entry,” said Neelesh Man Singh Pradhan, CEO of Nepal Clearing House Ltd. “The system will mainly help reduce risk and operational errors through automation.”
MICR makes it possible to have cheques deposited on the same day of request, unlike in case of non-MICR cheques that often take several days.
Nepal Rastra Bank today said in a circular that the banks are required to issue cheques fully compliant with MICR standard. Since this system is already in use in many banks, the central bank has directed all other financial institutions that are yet to provide MICR chequebooks to do so.
“More than 50 per cent of the banks are already using this system. However, there are non-MICR cheques with old customers that they still accept,” said Bhuwan Dahal, CEO of Sanima Bank. These banks do not take any extra charge for providing new MICR chequebooks.
At present, there are 30 commercial banks, 87 development banks and 59 financial companies belonging to class A, B and C groups, respectively. Of these, 128 institutions have already started issuing MICR chequebooks.
The central bank has also mentioned that non-MICR cheques, that any customer might have, will be valid only until mid-April, 2015 — around six months after the October 18th deadline. It has asked all the banks and financial institutions to inform their customers that non-MICR cheques will be invalid after the stated period.
When a cheque from one bank goes to another bank, the scanner will read all the details if it is MICR encoded. The customers will be able to deposit cheques to their accounts within few hours.
source: the himalayan times,28 july 2014
LINK
MICR is a component of Cheque Truncation, an online image-based clearing system that discourages the flow of physical cheques from one branch to the other for clearance. The system automatically reads data like bank code, branch code, bank number and account number after scanning them. The system can automatically read the figures and amounts only if any specific bank adds that feature.
“This will fasten the processing time by reducing the chances of wrong data entry,” said Neelesh Man Singh Pradhan, CEO of Nepal Clearing House Ltd. “The system will mainly help reduce risk and operational errors through automation.”
MICR makes it possible to have cheques deposited on the same day of request, unlike in case of non-MICR cheques that often take several days.
Nepal Rastra Bank today said in a circular that the banks are required to issue cheques fully compliant with MICR standard. Since this system is already in use in many banks, the central bank has directed all other financial institutions that are yet to provide MICR chequebooks to do so.
“More than 50 per cent of the banks are already using this system. However, there are non-MICR cheques with old customers that they still accept,” said Bhuwan Dahal, CEO of Sanima Bank. These banks do not take any extra charge for providing new MICR chequebooks.
At present, there are 30 commercial banks, 87 development banks and 59 financial companies belonging to class A, B and C groups, respectively. Of these, 128 institutions have already started issuing MICR chequebooks.
The central bank has also mentioned that non-MICR cheques, that any customer might have, will be valid only until mid-April, 2015 — around six months after the October 18th deadline. It has asked all the banks and financial institutions to inform their customers that non-MICR cheques will be invalid after the stated period.
When a cheque from one bank goes to another bank, the scanner will read all the details if it is MICR encoded. The customers will be able to deposit cheques to their accounts within few hours.
source: the himalayan times,28 july 2014
LINK
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