LankaClear enhances Sri Lanka’s payment industry

Nearly a decade after its inception in 2002, LankaClear (Pvt.) Ltd., Sri Lanka’s premier catalyst for facilitating payments systems infrastructure, continues to promote the growth of the country’s payment industry.

Through the introduction of progressive payments systems infrastructure, LankaClear has been the driving force behind the increase in service efficiency provided by the banking industry in terms of enhanced and speedier cheque clearing.

Owned by the Central Bank of Sri Lanka and all commercial banks in the country, LankaClear has since its establishment successfully discharged its mandate of enhancing the country’s payment systems.

The introduction of the state-of-the-art Cheque Imaging and Truncation System (CITS) in 2006 marked a milestone in the company’s achievements as Sri Lanka became the first country in the South Asian region and the second in the world to introduce the highly efficient cheque clearing process. Since its inception in 2006 the CIT System has gone through many stages of development making the current system a highly efficient, reliable and secure cheque clearing system.

CITS is an image based cheque-clearing system which replaced the physical movement of cheques with electronic information flowing through the clearing cycle. Up until then, deposited cheques had to be physically transferred to a central clearing system, resulting in a lengthy and cumbersome process which was vulnerable to security breaches and loss of items.

The introduction of CITS eliminated the need for the physical transfer of cheques, replacing it with an electronic process which greatly enhanced the security and efficiency of the clearing process. The required security for online transmission of data between the Banks and the Clearing House is facilitated by LankaSign, the Certification Authority operated by LankaClear through the issuance of digital security certificates ensuring the highest level of security.

The inherent efficiencies of the CIT system facilitates speedier cheque realisation, enabling banks to extend the counter cut-off time for cheque deposits for next day clearing, where some banks are now accepting cheques for next day clearing even until the bank closure time of 3 p.m.

The submission of the settlement cycle data online has enabled LankaClear to submit the settlement data and reports to the Presenting Bank by 1.30 p.m. on the following day enabling banks to credit the depositor’s account before 3 p.m. In effect, the CIT system has contributed to efficiencies within the entire banking industry as well as the efficiency of commercial transactions by ensuring speedier cheque realisation.

“CITS has provided the entire banking industry with the opportunity to attain enhanced and uniform levels of efficiency irrespective of the geographical location. Banks should take full advantage of this payment infrastructure to provide a more efficient service to their customers through the branch network, which would also facilitate the rapid economic growth the country is envisaging in the coming years,” the company’s CEO Sunimal Weerasooriya said.

It is important that the bank customers are also aware of the efficiency levels of the system and the cut-off times and account crediting times of their bank branches in order to make full use of this advanced clearing system for more efficient commercial transactions.

Due to speedier cheque realisation, Weerasooriya cautions the public to ensure sufficient funds are available in their accounts when issuing cheques. “Earlier, due to the time delay in cheques being realised, customers could issue cheques and ensure sufficient funds to cover the cheques a few days later. But with CITS as cheques are processed by the Paying Bank either on the same day or at the very latest the following day morning, sufficient balances have to be available at the time of cheque issuance.”

He highlights the importance of this responsibility by pointing out that issuing a cheque without sufficient funds is a criminal offence under the laws of the country and continuous cheque returns will lead to the closure of the account and will also see the issuer’s name captured in the Credit Information Bureau (CRIB) database.

Committed to supporting the Government’s aim of doubling per capita income in 2016, LankaClear aims to introduce progressive new payment systems infrastructure as a necessary precedent for economic growth.