BoN caps cheques at N$500 000

DOMESTIC cheques of more than N$500 000 will no longer be accepted by local banks or the payment clearing house (PCH) from June 10 next year, the Bank of Namibia (BoN) said yesterday.

The central bank said the step was taken as part of its ongoing fight against fraud.’In line with international best practices, risk-reduction measures must be in place to prevent risks from building up in payment systems,’ the BoN said in a statement. The central bank has recently embarked on a process to phase out cheques in the National Payment System (NPS) through cheque capping, because of risks of fraud, high probability of default by the payer and declining volume. ‘The reduction in the use of cheques is expected to encourage the public to conduct transactions through electronic,’ the BoN said.After consultations with the banking industry and the PCH, it was decided that domestic cheques will be capped at N$500 000 from June 10 2010.’Any cheque payment made in excess of N$500 000 will no longer be accepted by banking institutions. However, cheques issued before the implementation date, that is, June 10 2010, will be processed on exceptional basis,’ the BoN said.According to the central bank, there are immense benefits to the reduced cap. ‘It will mitigate incidents of fraud carried out through the use of cheques and will enhance the safety, speed and efficiency of the payment system in Namibia.