The constitutional anti-corruption watchdog had issued the order based on a complaint that said the company had purchased check clearing software at an inflated price, and banks and financial institutions (BFIs) were trying to transfer the cost of clearing checks to customers by making use of the electronic system.[break]
The direction has once again put brakes on the modernization process of Nepal´s banking system, which has been relying on physical means to transfer checks to the central bank prior to payments are settled.
The long overdue plan of clearing checks via electronic means, which was said to reduce the time of settling check payments to few hours from up to two days, had finally seen the light of the day last Thursday.
As said earlier, the company had started its work by clearing foreign currency denominated checks only. On the first day it had handled checks worth $235,000.
However, on the same day, the CIAA instructed it to suspend its services based on a complaint which said the clearing house had paid $1.3 million (Rs 108 million) for a check clearing software, which “could be bought for as less as Rs 30 million”.
In its defense, the NCHL has said it had followed due process while purchasing the software and has “evidences to prove its innocence”. “It is only a propaganda spread by someone, who didn´t win the contract to supply the software,” a high-ranking official of the company said.
CIAA, on the other hand, has said it would have never interfered in the works of the NCHL, which is mainly promoted by private banks and financial institutions, if Nepal Rastra Bank did not have stake in it.
“Since the central bank is a state entity, we had to take the complaint into consideration and ask the NCHL to suspend its service,” the official told Republica on condition of anonymity, informing, the commission is currently “investigating the procurement process of the software”.
“If there are no delays in submission of documents to prove innocence, we can wrap up the case within two to three weeks,” he said.
On top of this, the CIAA has also asked the central bank to give assurance that the cost of clearing checks via electronic means will not be transferred to customers.
The NCHL has said it will slap Rs 5 on clearance of each check between Rs 501 to Rs 5,000 and Rs 10 on checks more than Rs 5,000.
“The central bank should guarantee that these costs will be borne by banks and financial institutions,” the CIAA official added.
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