Once upon a time, encashment of bank cheques in the country was so time-consuming that depositing the cheque of one bank to another for encashment or transfer used to take two to three days or even a week in some cases. At that time, the manual clearing house was located in Bangladesh Bank or the main branch of Sonali Bank in the district town. Banks used to provide clearing service through exchanging cheques and then reconciling among themselves. Nowadays, by the grace of automation and digitisation, it is possible to complete such transactions on the same day, or even within a few hours.
Banking services have become easier in this era of digitisation. Online facility has created the ability to withdraw or transfer from any branch instead of the issuing branch. The facility of withdrawing cash from ATM booth of any bank or settling payment at POS machine using any bank's debit and credit cards has also been developed long ago. The introduction of Magnetic Ink Character Recognition (MICR) code-based cheques ushered in a new era in the banking world. Now we send money from one bank to another bank or from bank to Bkash, Rocket, Nagad, or to CellFin instantly. By dint of internet on mobile phones, banking is now at the customers' fingertips. Transactions are being made instantly from anywhere in the country and abroad without physically being present at the bank branch. Digital online banking is now open 24 hours a day, seven days a week, round the year.
Despite these improvements, the use of cash-cheques has not yet been reduced to zero, nor will it be possible. No matter how digital the country is, no matter how digital the currency is, the practice of using cash-cheques for payment from one party to another cannot be completely eradicated. At present typically, a cash-cheque is an open cheque which can be encashed over the counter at any branch of the same bank.
Let's say someone gives you a cash-cheque of Eastern Bank. But there is only Sonali Bank in your nearest village market. Or the cheque is from Bank Asia; but you have no Bank Asia branch; rather Islami Bank nearby your house. Now, if the cheque is presented for encashment at your nearby bank's counter, will that bank honour it? The common answer is: No, it won't. Because it is not their own bank's cheque. Usually, a cash-cheque cannot be encashed over the branch counter of any other bank. In such a case the cheque needs to be sent for collection which takes time and customer must have an account.
But we think it will not be impossible in the near future to encash a bank's cheque from the Cash counter of a branch of any other bank. As we can withdraw money instantly from any bank's ATM booth with other bank's debit card, it shouldn't be difficult to withdraw money using a cheque from any bank. The same mechanism of MICR technology in cheques will make it possible. Only a safe policy guideline by the controlling authority is necessary covering, inter alia, the following procedures:
When a cheque of a bank is presented at another bank's branch, the later bank will send it to the clearing house through MICR machine to the automated cheque processing system (BACPS) or national payment switch (NPSB). The cheque issuing bank will accept the request and after verifying within a specified period, send a positive signal to the cheque receiving bank, which will pay cash to the bearer over the counter. For this, the bank can charge a service fee, where policy covers so. Both banks may also share these fees. Dedicated windows may be set up at the clearing house for this specific service. Initially, the proposed facility can be introduced on an experimental basis among certain interested banks only. Of course, questions may arise over this new system. For example:
One: will the timing of such cheque transactions be the same as normal transaction hours? No, the timings for this may be limited, for instance from 11 am to 1 pm. If the customer places the cheque at the branch within this period, the bank will accept it for processing the payment. Initially, processing for payment may take a bit more time. But gradually it must come to a win-win level.
Two: can a customer withdraw cash from a different bank, despite the cheque-issuing bank has a shortage of cash-money and is unable to pay customers? In such cases the amount may be limited, say a maximum cheque of BDT twenty thousand can be honoured at any branch of any bank. The clearing house may delist any bank for legitimate reasons. Note that no one raises the same concern in case of debit card.
Three: Will a customer avail of this service at the cost of higher service charge over ATM or similar? Many customers may agree to pay higher for such a service from their nearest or convenient branch to save time or conveyance expenses or for safety reasons.
Four: is there any instance of facilitating cashing a cheque from banks other than the issuer in other countries? In the United States, not every bank will cash a cheque from a noncustomer, but many do. There are also many cheque cashing stores in the US other than banks. Several popular grocery and retail chains provide cheque cashing services, even round the clock that might be more convenient than a bank. Of course, they charge significant fees. Walmart cashes pre-printed cheques, payroll and government cheques, cashier's cheques, two-party personal cheques and more. Cheque cashing services are also available in Kroger, Community Financial Service Centre, Payomatic, PLS 24/7, Speedy Cash, 7-Eleven, Union Credit and in many gas stations as well.
Five: Why has a similar facility not been introduced in the country yet? Banks are not obligated to do so, although no rules prevent banks from cashing another bank's cheque. Therefore, no such initiative has been taken till date.
If there is sufficient firewall against risks and instructions from the competent authority, banks will be interested for the sake of more customer friendly services. Proposed instant payment facility may be termed as 'Any Cheque Any Bank' service. If this facility can be introduced, it will be considered another milestone in the history of Digital Bangladesh.
In many countries around the world, nowadays customers can instantly pull the money anytime to their own bank accounts by sending a snapshot of another bank's cheque through mobile app. It is hoped that this form of service will also be launched in Bangladesh some day. Although the country is gradually becoming cashless, but since not everyone in the country has a bank account and each person will need cash money, the utility of cash cheques cannot be ignored. In that case the introduction of 'Any Cheque Any Bank' facility will be effortless and beneficial for all. By using the existing infrastructure of secure NPSB or other payment gateway of money transaction management, it is possible to introduce the new concept in Bangladesh easily. Then the cheque will become like an ATM card. Authorities concerned and the stakeholders may think for doing their respective needful to implement the dream proposed.
Muhammad Munirul Huq is an Islamic banker and certified Shari'ah advisor and auditor (CSAA) by AAOIFI, Bahrain.
munir.csaa@gmail.com