CBS meets stakeholders to tackle ‘bounced cheques’ issue |26 February 2015

The Central Bank of Seychelles (CBS) yesterday met representatives of financial institutions to find best and effective ways to tackle the issue of ‘bounced cheques’ which has increased at an alarming rate.

The meeting, chaired by CBS governor Caroline Abel and other high officials of the bank, met managing directors of all banks in Seychelles, the Seychelles Credit Union and the police, the latter being an important stakeholder in dealing with the laws and offences related to ‘bounced cheques’.

Stakeholders have agreed to review the policy regarding bounced cheques established since 2012 to make it more efficient. They should come up with concrete proposals in the coming days.

Explaining the reason behind the meeting, Ms Abel said the financial system should start making a difference regarding this problem and to have a structure in place to enhance the current one so that they can tackle this issue.

She said representatives of the police were present to deal with the legal aspect of the issue and the media to create more public awareness.

“Since 2012 we have been having that ‘bounced cheques’ problem. The Central Bank together with its financial community, the commercial banks and the Seychelles Credit Union which is also a participant in the ‘clearing house’, met to take measures to put the situation under control. Because when an individual or business does not honour their payment, it makes people lose confidence in that form of payment and the economy in general loses revenue,” said Ms Abel.

She added that these cheques affect individuals who are denied their payment, businesses their revenue to re-invest and the government tax system as revenue is not collected on time for the country’s expenses.

“We at the Central Bank which looks at the economic activity in its entirety; it concerns us as we have to ensure that the different mechanisms needed for the economy to receive its revenue on time, functions,” she said.

Regarding reverting to electronic payments as a means to solve the situation, Ms Abel said unfortunately not all banks are currently equipped with such financial platform to enable e-transaction. Banks’ internal system will first have to integrate with the core banking system and it is planned this should be done by June latest.

As to falling back on cash payments, she said this will create another problem for the CBS as it will have to release more liquidity on the market which is not in the interest of the economy.

In her presentation regarding this issue, Liz Julienne, senior payments system officer at the Central Bank said ‘bounced cheques’ have cost the economy and the financial system millions of rupees.

Though the penal code exists to deal with this issue, not much impact has been felt so far.

That is why it was recommended that financial institutions review their policy and public awareness is conducted so they are reminded that ‘bounced cheques’ are a criminal offence.