The Cen­tral Bank and lo­cal com­mer­cial banks have im­ple­ment­ed a new sys­tem of elec­tron­ic cheque clear­ing that has re­duced to two days the time it takes to clear a cheque.

As at Feb­ru­ary 2023, the pro­cess­ing time for cheques, af­ter pre­sen­ta­tion to a bank, was re­duced from four days to two days.

This was among the key achieve­ments the bank out­lined in its strate­gic plan.

“In Feb­ru­ary 2023, the com­mer­cial banks and Cen­tral Bank launched an elec­tron­ic cheque clear­ing fa­cil­i­ty that is in­tend­ed to low­er the pro­cess­ing time for cheques from T+4 (four days af­ter a cheque is pre­sent­ed to a bank) to T+2 (two days af­ter the cheque is pre­sent­ed),” the bank said.

In a news re­lease, dat­ed Jan­u­ary 24, 2023, the Bankers’ As­so­ci­a­tion of T&T (BATT) de­scribed the Elec­tron­ic Cheque Clear­ing (ECC) ser­vice as a bet­ter way to bank.

It said BATT and the Cen­tral Bank are mak­ing es­sen­tial changes to the na­tion’s cheque clear­ing ser­vice.

The re­lease not­ed that us­ing im­age-based tech­nol­o­gy, ECC fa­cil­i­tates digi­tised ex­change of in­for­ma­tion be­tween banks. Among the oth­er ad­van­tages of the new sys­tem are:

• ↓No more dai­ly trans­port of phys­i­cal cheques be­tween in­sti­tu­tions;

• ↓Time­ly rec­on­cil­i­a­tion across banks;

• ↓Ear­li­er no­ti­fi­ca­tion of re­turned cheques.

The Sun­day Busi­ness Guardian tried to de­ter­mine the per­cent­age of pay­ments that were done by cheque.

Re­spond­ing to the ques­tion, the Cen­tral Bank said: “In 2022, cheques ac­count­ed for 32 per cent of the to­tal val­ue of non-cash pay­ments.”

Sco­tia­bank said: “Over the past cou­ple of years, we have seen sig­nif­i­cant in­creas­es in dig­i­tal trans­ac­tions and a re­duc­tion in the us­age of cheques. For our clients who utilise cheques as a means of pay­ment, we are pleased with the in­tro­duc­tion of the ECC, which pro­vides im­proved se­cu­ri­ty and fraud de­tec­tion from the stan­dard­i­s­a­tion of cheques and will even­tu­al­ly fa­cil­i­tate faster cheque pro­cess­ing.”

Cur­ren­cy pro­cess­ing

In its strate­gic re­view, the Cen­tral Bank al­so re­vealed that it had ac­quired new cur­ren­cy pro­cess­ing ma­chines were ac­quired and in­stalled, in time and on bud­get.

“The project was care­ful­ly ex­e­cut­ed, led by the bank­ing op­er­a­tions team, with close sup­port from fa­cil­i­ties and oth­er de­part­ments. Staff mem­bers went on train­ing to Mex­i­co and Ger­many and suc­cess­ful­ly nav­i­gat­ed a few chal­lenges along­side the ma­chine providers,” the Bank added.

The Cen­tral Bank said com­mer­cial banks send and re­ceive bank notes to/from the Cen­tral Bank.

It said the bank notes they send are processed and the ‘fit’ notes (those that are in good con­di­tion) are re-is­sued to the banks.

The bank added that from Ju­ly 1, 2022 banks were charged a fee for the pro­cess­ing of ‘fit’ notes by the Cen­tral Bank. This fee, it said, is geared to en­cour­ag­ing banks to re-use notes that are ‘fit’ with­out send­ing them to the Cen­tral Bank.

It said the im­ple­men­ta­tion of the mea­sure to charge com­mer­cial banks a fee for the Cen­tral Bank’s pro­cess­ing of fit ban­knotes is yield­ing tan­gi­ble re­sults, as banks are pro­gres­sive­ly stream­lin­ing their own note pro­cess­ing.

Asked for more de­tails on the pur­pose of the cur­ren­cy pro­cess­ing ma­chine, the Cen­tral Bank said: “The new cur­ren­cy ma­chine will process (count, de­ter­mine fit­ness for re-use, and pack­age) poly­mer ban­knotes much faster than the one it re­places. The pre­vi­ous ma­chine had been in ser­vice for many years and was pri­mar­i­ly used for pro­cess­ing the cot­ton notes which have been de­mon­e­tised,” the bank ex­plained.

Cy­ber­se­cu­ri­ty

Ac­cord­ing to its strate­gic plan there are four main pri­or­i­ties for the Cen­tral Bank over the com­ing six months re­lat­ed to boost­ing the ef­fi­cien­cy of the pay­ments sys­tem, fin­tech, cy­ber­se­cu­ri­ty of its op­er­a­tions and the su­per­vi­sion of cy­ber­se­cu­ri­ty of li­censees.

In out­lin­ing oth­er mea­sures of the plan, the bank said a guide­line on cy­ber­se­cu­ri­ty re­quire­ments for li­censees will be draft­ed.

It said en­gage­ment with fi­nan­cial com­pa­nies in re­cent months has shown that most firms have some form of de­fences against cy­ber­at­tacks.

Steps will al­so be tak­en to fur­ther boost the se­cu­ri­ty of the Cen­tral Bank’s cy­ber op­er­a­tions.

The bank said from April 1, 2023 the se­cu­ri­ty unit of the IT De­part­ment will be head­ed by an as­sis­tant man­ag­er who will spear­head the con­tin­ued stream­lin­ing and strength­en­ing of this fun­da­men­tal ac­tiv­i­ty.

“This will po­ten­tial­ly in­clude ac­quir­ing fresh ex­per­tise, more train­ing, greater li­aisons with oth­er agen­cies and out­sourc­ing as ap­pro­pri­ate. Pos­si­ble vul­ner­a­bil­i­ties in the Cen­tral Bank’s com­mu­ni­ca­tion and elec­tri­cal in­fra­struc­ture will al­so be in­ves­ti­gat­ed and ad­dressed,” the bank said.

It not­ed that a gap ex­ists how­ev­er, in the avail­abil­i­ty of a con­sol­i­dat­ed set of stan­dards for the do­mes­tic fi­nan­cial in­dus­try.

As a re­sult, the Cen­tral Bank, in con­sul­ta­tion with oth­er reg­u­la­tors and the IMF, will draw up a guide­line on these stan­dards.

“The guide­line will form the ba­sis for our su­per­vi­sion of li­censees in this area, and can al­so as­sist oth­er fi­nan­cial in­sti­tu­tions not cur­rent­ly su­per­vised by the Cen­tral Bank (such as cred­it unions),” the bank said.

The bank al­so de­tailed progress it has made from Oc­to­ber 1, 2022 to March 31, 2023.

“The strong per­for­mance in the first year of the Cen­tral Bank’s cur­rent strate­gic plan car­ried over in­to the first six months of year two.

In its strate­gic plan, the Cen­tral Bank said there are a num­ber of oth­er projects which gen­er­al­ly fall in­to the cat­e­gories of ei­ther sub­stan­tial­ly com­plet­ed and in an ear­ly im­ple­men­ta­tion phase (such as the project to ac­quire the cash pro­cess­ing ma­chine and the cheque trun­ca­tion ex­er­cise); or a re­vival of mo­men­tum on ear­li­er iden­ti­fied projects (such as pen­sion re­form ac­tions).

Ac­cord­ing to the bank it will fo­cus on strength­en­ing do­mes­tic, re­gion­al and in­ter­na­tion­al pay­ments.

It ex­plained that on the do­mes­tic side, a draft of leg­is­la­tion and reg­u­la­tions to con­sol­i­date and stream­line pay­ments ac­tiv­i­ties will be com­plet­ed with tech­ni­cal sup­port from the le­gal de­part­ment of the IMF.

It said a team from re­gion­al cen­tral banks has been con­vened to pro­pose prac­ti­cal so­lu­tions to fa­cil­i­tate pay­ments with­in Cari­com, and is ex­pect­ed to make good progress over the com­ing six months.

The Cen­tral Bank will al­so be part of in­ter­na­tion­al ef­forts to con­struct a more ef­fec­tive glob­al pay­ments net­work.

Ad­di­tion­al­ly, the bank will build out its ca­pac­i­ty to su­per­vise fin­tech ac­tiv­i­ties.

“An IMF tech­ni­cal as­sis­tance mis­sion in late April 2023 is ex­pect­ed to sig­nif­i­cant­ly broad­en our ap­pre­ci­a­tion of world-wide ex­pe­ri­ence and best prac­tices in this area,” said the reg­u­la­tor of fi­nan­cial in­sti­tu­tions.

It added that this will be com­ple­ment­ed by its con­tin­ued en­gage­ment with oth­er bod­ies such as CAF (the Latin Amer­i­can De­vel­op­ment Bank) and the UNCDF (Unit­ed Na­tions Cap­i­tal De­vel­op­ment Fund).

Ac­cord­ing to its strate­gic plan, oth­er projects over the next half year in­clude putting the elec­tron­ic cheque pro­cess­ing fa­cil­i­ty in­to full op­er­a­tion; full test­ing and pro­cess­ing on the new ban­knote ma­chines and the ear­ly phase of close mon­i­tor­ing by the su­per­vi­sion de­part­ment of the two in­sur­ance com­pa­nies over which con­trol was re­leased.

The bank al­so in­tends to take spe­cif­ic steps to ad­dress is­sues raised in the 2022 staff sur­vey; and a re­vival of ac­tiv­i­ties to­wards im­prov­ing over­sight of pri­vate pen­sions in T&T.

The Cen­tral Bank al­so out­lined some of its key achieve­ments.

It not­ed that the Of­fice of the Fi­nan­cial Ser­vices Om­buds­man (OF­SO), which is al­so cur­rent­ly re­spon­si­ble for the Na­tion­al Fi­nan­cial Lit­er­a­cy Pro­gramme (NFLP), was up­grad­ed.

As a re­sult, it said the FSO will op­er­ate at the se­nior man­age­ment lev­el while a new as­sis­tant man­ag­er po­si­tion was cre­at­ed, for which ap­pli­ca­tions are cur­rent­ly be­ing re­viewed.

The work of the NFLP is be­ing ex­pand­ed to strength­en pub­lic aware­ness and un­der­stand­ing of fin­tech ap­pli­ca­tions, in ad­di­tion more gen­er­al­ly to mar­ket con­duct by fi­nan­cial en­ti­ties, the bank added.