LankaClear (Pvt) Ltd., the company that operates LankaPay – the National Payment Network of Sri Lanka and functions under the supervision and guidance of the Central Bank, celebrated the 10th year anniversary of launching their revolutionary Cheque Imaging and Truncation System (CITS) recently. CITS handles all the domestic interbank rupee cheque clearings in the country.
Cheque truncation is the process that converts a physical cheque into a substitute electronic form (digital image based) for transmission to the paying bank. This process eliminates cumbersome physical presentation of the cheque, which saves time and processing costs. With the introduction of CITS in 2006, Sri Lanka became the 1st in South Asia and 2nd in the world to have rolled out such world-class payment and settlement infrastructure to enable nationwide cheque clearance on T+1 basis where beneficiary could encash a cheque on the next business day.
Operating under the provisions of the Payment and Settlement System Act No. 28 of 2005 that stipulates procedures for automated cheque clearance, the introduction of CITS revolutionized the clearing process moving from physical cheque to an image-based clearing mode. This has brought down the clearing cycle to one working day from a previous three to five day period due to elimination of physical movement the instrument. This has also enabled the banks to offer extended time for their customers to submit cheques, which has provided greater convenience to all banking customers.
With the issuance of a fresh mandate by the Central Bank on digitizing payments, LankaClear under its brand name LankaPay has introduced a host of other electronic payment modes offering greater convenience to customers. Coinciding with CITS 10th year anniversary, the company is also expecting to launch an improved online version of the system to enhance security as well efficiency. This would also allow the banks to offer their customers even further extended hours to submit their cheques to further improve upon their customer convenience.
Speaking of the 10th year anniversary of CITS, Mr. Anil Amarasuriya, Chairman – LankaClear said “LankaClear has been providing a vital national service by mediating all domestic interbank payments and settlements on behalf of the Central Bank; and by ensuring greater efficiency, security and inclusion in financial services. Smooth and uninterrupted operation of CITS for ten long years is a commendable achievement of the LankaClear team which is in testament to the confidence reposed on us by all our stakeholders. I am confident that with a host of convenient, affordable and secure electronic payment modes to be introduced in near future, we will continue to be a trailblazer in the payment and settlement arena which in turn will transform the lives of people whilst ushering the country towards a paperless economy.”
Expressing his sentiments on the CITS 10th year anniversary Mr. Channa de Silva, General Manager/CEO of LankaClear said “We are extremely proud to have achieved a decade of excellence in cheque clearing and providing a valuable service to our member banks. The banks in turn have been able to extend this service enhancements to their customers. Even though started as a cheque clearing house, we have moved onto further expanding our services by establishing LankaPay National Payment Network where the newest service being offered is real time interbank fund transfer. With all these electronic payment instruments going live, we anticipated the cheque volumes to go down, however contrary to our expectations, the volumes have increased. North and East provinces have recorded the highest percentage volume growth for cheques compared to rest of the country. After the war, general public in these areas are found to be depositing their money into bank accounts rather than keeping cash with them, thus, the possible reason for growth. However, we assume that the cheque volumes would gradually decline when a majority of general public moves into adopting electronic payment modes.”
Next to cash, cheques have been the most widely used payment instrument for nearly a century. Prior to1950, the cheque clearing function in Sri Lanka was performed by Indian Imperial Bank. This role was subsequently entrusted to the Central Bank of Sri Lanka. With the introduction of Magnetic Ink Character Recognition system (MICR), cheque clearing was automated and Sri Lanka Automated Clearing House (SLACH) was established on 2nd March 1988. SLAH was later divested to LankaClear on 1st April 2002 and the company, as the national clearing house, introduced CITS on 11th May 2006. LankaClear, as the sole authority in cheque clearing, has exceeded expectations by ensuring a smooth and uninterrupted operation of CITS, which has a significant bearing on the entire banking operation and moreover towards fostering public confidence in the entire banking ecosystem. (Media Release)