The clearing process of cheques in the Bahamas has come under close scrutiny by a Free National Movement Senator.
Senator Desmond Bannister told The Bahama Journal that if the country is going to encourage business in an electronic commerce environment, the Central Bank has to ensure that the period for a cheque to clear is more reasonable.
As it stands, the clearing process in the Bahamas, he said, cannot be seen as an incentive for any business to relocate here.
“Imagine trying to run your business where cheques drawn on banks in foreign countries take six weeks to clear,” he said.
“It seems that the banks are earning a great deal of interest on their customer’s money, while holding cheques for this length of time…all of the banks are computerized. How many millions in interest are the banks earning through this process?” questioned Senator Bannister.
Senator Bannister is adamant that the wait should not be so long, particularly with the Bahamas being a world-class centre for e-commerce. “Something has to be done about that so that the financial services could flourish without this long wait,” he stated.
“We just debated the e-commerce legislation,” he said. “One of the stated purposes of that legislation is to make it easier for foreign businesses to relocate to the Bahamas and for Bahamian businesses to do business with other partners around the world…business people are not going to wait six weeks for a cheque to clear when you have instantaneous communication around the world. If we are really a world-class banking center, we have to make it possible for cheques to be able to clear in much more reasonable time,” he reiterated.
Presently, the Central Bank of the Bahamas is holding talks with the banking community to establish a system to electronically clear cheques, according to State Minister for Finance, James Smith.
The former Governor of the Central Bank told The Bahama Journal that presently the process is done manually each morning at the institution.
“The idea is to put that process on-line between banks, using information technology,” Minister Smith said.
He added that the Central Bank has engaged the services of an Internet provider that is assisting with the exercise.
Meanwhile, Senator Bannister also questioned why local cheques take almost a week to clear when drawn on other banks throughout the country.
“You write a cheque to a bank and they debit your account immediately, but if you deposit a cheque, you are often told that you cannot access that money for about five to six days later. You don’t get same-day credit,” Senator Bannister said.
“There is absolutely no reason why that would be so, except that the financial institution themselves may be making money off your money for a period of five days because communication between the banks are virtually instant. The minute you deposit your money on one bank in Nassau, you ought to be able to access your money,” he said.
Senator Bannister’s argument is that if the government is seeking to make e-commerce the third pillar of the nation’s economy, then financial services must be on par with the advanced telecommunications in the world.
By Hadassah Hall, The Bahama Journal
