Cheques returned by Banks due to lack of funds
Cheques are still the most convenient and preferred non cash payment instrument for commercial transactions in Sri Lanka. Currently 5.6% of the cheques presented are returned unpaid due to various reasons. Of the total cheques returned, over 50% are due to lack of funds. The total value of such returned cheques in a day is substantial, amounting to over Rs. 550 mn. The volume of cheque returns in Sri Lanka is high by international as well as regional standards and it has serious implications on the public confidence of cheques as a means of payment and also causes tremendous cash flow problems, especially to the trading community.
In the past, regular representations had been made by Trade Chambers, Traders Associations and the Central Bank of Sri Lanka for banks to take effective steps to contain the volume of cheques being returned unpaid. While banks have already taken several meaningful steps in this regard, it was apparent that further action was necessary to control the incidence of cheque returns and to make the cheque leaf, a reliable form of settlement. Therefore on an initiative taken by the National Payment Council with the concurrence of Banks and LankaClear (Pvt) Ltd, and the approval of Central Bank of Sri Lanka, it has been decided to make cheques returned with the remark “ Refer to Drawer” ( Return Code 1) as Non- Representable with effect from 1st April 2008. This is expected to encourage the trading community and others dealing in cheques to use the cheque as the preferred means of payment and create a culture for cheque issuers to ensure the availability of funds for payment of cheques on first presentation.
Accordingly, the general public is hereby notified that all Cheque Return Notifications (CRNs) under Return Code 01 (Refer to Drawer) would not be accepted by the Banks for representation with effect from 1st April 2008 and would be rejected by the Cheque Imaging and Truncation System (CITS) with effect from 1st April 2008, as in the case of several other cheque return codes which are currently classified as non representable.
Banks do appreciate that the proposed change may, at the beginning, cause a certain amount of inconvenience to holders of cheques that are returned with the said remark who will now be required to obtain a fresh cheque in place of the one returned but feel the benefits would outweigh any such inconvenience. For any further clarification please contact the nearest Bank branch. |
