LankaClear becomes first in South Asia to launch online transfers for CITS

LankaClear Ltd., the operator of Sri Lanka’s national payment network, LankaPay, made yet another stride in the payment and settlement arena by completely automating the cheque clearing cycle by introducing the online transfer mode of the Cheque Imaging and Truncation System (CITS). 

Sri Lanka made history with this revolutionary initiative by becoming the first country in South Asia to launch the Online Transfer Mode of CITS, which replaced the current inefficient practice of transferring the last mile of cheque images through CD-ROMs. This significant achievement is anticipated to further bring down human intervention and inefficiencies associated with the current cheque clearing process to a bare minimum, thus allowing the banks to further extend their service levels to their customers.

Operating under the supervision and guidance of the Central Bank, LankaClear launched the Cheque Imaging and Truncation System (CITS) in 2006, which transformed the domestic interbank cheque clearing process by eliminating the cumbersome physical presentation of the cheque, which saved a significant amount of time and brought down processing costs substantially. 

Although the introduction of CITS eliminated inefficiencies associated with the physical presentation of cheques, the banks still had to submit the MICR data of physical cheques saved onto CD-ROMs and delivered to LankaClear daily. This process was found to be ineffective due to numerous practical issues encountered in delivering the CD-ROMs before the assigned cut-off times and security vulnerabilities due to the possibility of CD ROMs being damaged during transportation.

With the launch of the Online Transfer Mode of CITS, banks are now able to transmit the MICR data of physical cheques through a direct online transfer mode to LankaClear through a secure Virtual Private Network (VPN) with end-to-end encryption. This will be comparatively cost-effective to the banks and will also eliminate the hassle of having to deliver the MICR data physically to LankaClear. 

The new system went live on 18 October 2016 with the participation of several member banks, namely Hatton National Bank, Commercial Bank, Cargills Bank, Standard Chartered Bank and NDB and subsequently the other banks will join the online mode. The end objective of introducing the CITS online mode is to offer greater flexibility to banks’ customers, reduce the clearing cycle and further enhance the security aspects of cheque clearing.

Speaking of the launch of CITS online, LankaClear Ltd. Chairman Anil Amarasuriya said: “It gives me great pleasure to announce the launch of the Online Transfer Mode of CITS, which is a testament to LankaClear’s progressive journey towards empowering the nation with an efficient, cost-effective, inclusive and secure payment infrastructure, leading the way as the country’s National Payment Network. 

“Sri Lanka was also the first country in South Asia to successfully roll out a sophisticated system like CITS way back in 2006. A decade down the line, the company has repeated this success once again by becoming the first South Asian country to introduce the online transfer mode of CITS, taking a leap towards enhancing the efficiency and effectiveness of the financial sector in the country.”

Speaking on this momentous occasion, LankaClear General Manager/CEO Channa de Silva stated: “LankaClear has been continuously revolutionising the payments and settlements landscape in Sri Lanka by introducing many technology innovations and this is only another milestone in our long journey, even though it is an extremely significant achievement for the country. Through this initiative, we came one more step closer to helping banks increase their efficiencies and enhance customer experience. We have taken our role of helping the country to achieve financial inclusivity seriously and channelled all our innovations towards achieving this objective. We firmly believe that by continuously introducing new innovations, such as CITS online mode, LankaClear is fulfilling its obligations to the nation by bringing technology closer to the hearts of the people in this country thus making their day-to-day life even more simplified and convenient.”