Halt e-cheque clearing service

KATHMANDU, DEC 30 -

Nepal Clearing House Limited (NCHL) suffered a major jolt the day it started the electronic cheque clearing (ECC) service.

The Commission for the Investigation of Abuse of Authority (CIAA) on Thursday dispatched a letter to the company, asking it to halt the ECC service until it completes its investigation into alleged misappropriation of funds during software procurement.

The anti-graft body has said it took such a decision following a complaint that NCHL purchased the software paying more than the actual cost. “The complaint said the company purchased the software for Rs 240 million, while the actual price is just Rs 30 million,” said Bhagabati Kumar Kafle, secretary and officiating chief at CIAA. “We have sent a letter, directing them to halt the service immediately and submit the entire procurement documents to CIAA.”

However, the NCHL management has said the software procurement was done following due international bidding procedure in which the software’s trial and tests in at least three countries was one of the major criteria.

Acknowledging the receipt of the letter, NCHL CEO Neelesh Man Singh Pradhan said they would discuss the matter at the board meeting to be held on Friday. According to Pradhan, NCHL’s first day’s operation was smooth and it cleared cheques worth $250,000. The company was expected to start clearing domestic currency cheques after a week.

NHCL has been established in the joint ownership of 23 commercial banks, two development banks, Nepal Rastra Bank (NRB) and Smart Choice Technologies (SCT).

So far, inter-bank cheques are cleared manually, under which financial institutions (presenting banks) collect cheques of other institutions (paying banks) and forward them to NRB for settlement. The process takes up to two days.

But after the implementation of ECC, presenting banks will scan cheques and send them to NCHL, which will then forward them to paying banks. The paying banks, after verifying signature and other details, will send back the cheques to NCHL, which will then forward them to NRB for final settlement. According to NHLC, the entire process is completed in real time.

Some bankers had expressed strong reservation about the high amount paid for the software, saying that cost would ultimately be transferred to member banks and financial institutions (BFIs). Nepal Banker Association (NBA) recently formed a three-member committee to study the issue.

Source: Kantipur