The Market Monitor Minding the Nation's Business
By Jerry Maglunog
Beginning Monday, Jan. 4, banks will no longer accept checks with erasures and alterations, in compliance with an agreement between the Philippine Clearing House Corp. (PCHC) and the Bangko Sentral ng Pilipinas (BSP).
Erasures and alterations on checks usually involve dates, names of payees, amounts in figures, amounts in words, signatures, account names and numbers and check numbers.According to BSP Deputy Governor for Supervision and Examination Sector Nestor Espenilla Jr., the order for all banks to no longer accept checks with erasures or alterations would mean more efficient banking services.
The PCHC said it has issued guidelines for the rejection of checks with erasures, alterations, or deficiencies in response to clamor from banks to have clear rules on altered checks.
The new rule was signed by PCHC President and CEO Emmanuel Barcena last August 24 but will take effect only on Monday, January 4, the first day of office work for 2016.
PCHC approved the guidelines from the final recommendation of a technical working group that included all banking associations led by the Bankers Association of the Philippines (BAP).
The “no erasures” rule is one of the security proposals included in the check truncation system (CTS) and check image clearing system (CICS) that would be implemented by the PCHC – part of the process that aims to shorten check clearing from three days to just one.
A BAP official said the biggest benefit of not accepting checks with erasures is speeding up the clearing process on all checks.There are about 800,000 check transactions daily in all local banks, the official said. PCHC is composed of some of the biggest banks-members of BAP, the organization of the 34 biggest unibanks in the country either in assets, depositors and branches category.
PCHC was incorporated in July 1977 as a private corporation co-equally owned by all commercial banks listed as members of the BAP. The House started live operations on June 6, 1980, to become the first automated check clearing house in Southeast Asia. Banks deliver their outward clearing demands to PCHC for processing. PCHC reads the MICR information encoded on the physical documents presented for clearing and reconciles unbalanced batches in order to prove the accuracy of clearing work from the banks.
Concurrent with the capture of information are the imaging and fine sorting of items down to branch, account and check-number sequence. The Electronic Check Clearing System (ECCS) was introduced to complement the full computerization project of the settlement bank, i.e. BSP, which required the early submission of clearing results.
The ECCS provides an online communication linkage between the clearing banks and the PCHC, by which means the transmission of electronic check data by the bank/branches to the PCHC ECCS host computer for netting purposes is expeditiously achieved.
The ECCS provides check clearing services covering 69 geographical regions processing a daily average of 704,000 clearing items from more than 5,600 participating bank branches nationwide.