The Kenya Bankers Association has announced that upcountry banks will stop charging extra fees on cheques issued outside Nairobi starting this July. This is in a bid to speed up business transactions and also to push banks to decentralize the process of cheque truncation. KBA Chief Executive Officer, Mr. Habil Olaka said that this will make the country a ‘one clearing zone’.

Most banks charge customers 2.5 per cent of the face value of the cheque as remittance commission. However, amounts exceeding a certain limit have a fixed levy. Removal of this fee is part of KBA’s project to automate the process of clearing cheques, a system that went live towards the end of last year in the Nairobi branches. This move is expected to reduce the cost of doing business in upcountry and reduce the period taken to clear cheques to two working days.

Banks will not only be expected to make the necessary amendments to their systems for this July change, but will be expected to purchase truncation equipment for all their upcountry branches by the end of the year. The introduction of truncation system will change the process from the physical presentation of cheques to electronic transmission between banks.