Banks in Ethiopia to Issue Standardized Cheques

By Mikias Tesfaye

Standardized cheques represent yet another application of digitized technology in banking

The National Bank of Ethiopia (NBE) is to pilot use of standardized cheques at all banks starting at the end of this month.

Standardized cheques, while identical in appearance, except for logos of individual banks, will have security features that are believed to make them extremely difficult to forge. The pilot programme will take place for three months, sources disclosed to Fortune, while banks are expected to phase out existing cheques in six months from the start of the pilot programme.

NBE took the initiative of issuing the standardized cheques back in 2013 when it sought to prevent forgery and speed up clearing and settlement processes.

With the introduction of standardized cheques, the long process of clearing and settling post-dated cheques, will become obsolete. A common industry practice involving motorbike messengers, widely used for the physical transfer of cheques, will become a thing of the past. With the new standardized cheques a digital platform where financial transactions can be made with a simple swipe at the scanner will be implemented, communicating the message through an integrated network developed by ET-Switch, connecting all bank branches from a point.

The bidding process involving seven local and international companies was held to identify the company that would print 231,513 corporate cheque books, with 50 leaves each, 154,345 cheque books with 100 leaves and 21,198 and 12,205 cheque books with 25 and 50 leaves, respectively.

Bidders included Ethiopian Trade-Contract (ET-CON) Plc, Sudan Currency Printing Press (SCCP), Tall printing, Shree Nidhi Secure Printing, De La Rue, and Manipal Group, but the contract was awarded to Madrass Security Printers, an Indian company with 25 years' experience in security printing.

NBE started training sessions for mid-level and senior bank managers on Wednesday November 4, 2015, on the usage and security issues of the standardized cheques.

Tadesse Gemeda, Branch Affairs director at Awash International Bank, who took part in the training, told Fortune that the process focused on procedural aspects of operating with the standardized cheques, including the responsibilities of banks during clearance and settlement, and scanning techniques.

Yohannes Merga, vice president of Corporate Services at the same bank, believes the standardized cheques will facilitate clearance and settlement tremendously with their use of a digitized technology, whereas currently, banks are required to physically deliver cheques for clearance, which takes a huge toll in terms of time efficiency.

Despite the advantages, standardized cheques have in limiting fraud, enhancing the speed of clearance and settlement and their technological edge with ultraviolet sensitive paper, watermark logo, micro-lettered lines and Magnetic Ink Character Recognition (MICR), some claim the cheques are not all that great.

Source: AllAfrica