Live Operation of the Cheque Imaging and Truncation System

The Hong Kong Monetary Authority (HKMA) and Hong Kong Association of Banks (HKAB) jointly announced today (Thursday) that the new Cheque Imaging and Truncation System (CITS) will commence operation on 21 June 2003.

With the CITS, the new image-based cheque clearing method will transform the current clearing process driven by physical exchange of cheques. Under the CITS, low-value cheques will be exchanged and cleared on the basis of electronic presentation of cheque images and the relevant cheque data. This will mitigate the need for banks to deliver physical low-value cheques for clearing and settlement. The higher value cheques and special items (such as suspicious cheques) regardless of value will still be physically presented together with their images to the paying banks.

Customers will continue to enjoy the same level of service after the adoption of CITS. There will be no change to the current practice pertaining to the writing of cheques, the deposit of cheques by payees, the timing of the availability of funds and the returning of unpaid cheques to payees.

"The implementation of the new system is an important step in modernising the cheque processing infrastructure in Hong Kong," said Mr Joseph Yam, Chief Executive of the HKMA. "Benefiting from technological advancement, the new system will be able to streamline the operation and enhance the efficiency of cheque clearing in Hong Kong," he added.

With the support of the HKMA, HKAB has commissioned Hong Kong Interbank Clearing Limited (HKICL), which operates the clearing house for cheques and other means of payments between banks, to implement the CITS on an industry-wide basis. HKICL has been working together with banks in Hong Kong to implement this new system for cheque processing.

Mr Raymond Or Ching-fai, HKAB Chairman, said, "automating the cheque clearing process reinforces Hong Kong's position as a dynamic, global financial centre. No additional fees will be charged as the cost of implementing this new technology will be borne by banks. It is recognised that all parties involved in cheque processing are expected to reap long-term benefits from the new system including reduced operational costs and improved processing efficiency."

In order to obviate the need for banks to make physical presentment of cheques for clearing, the Bills of Exchange Ordinance has been amended to allow banks to present the electronic image of the cheques for payment. To this effect, the Bills of Exchange (Amendment) Ordinance 2003 was gazetted and enacted on 28 March 2003.

For further enquiries, please contact:

Hong Kong Monetary Authority

Sylvia Yip, Manager (Press), at 2878 1687 or
Thomas Chan, Senior Manager (Press), at 2878 1480

Hong Kong Association of Banks

Ms Rona Morgan, Secretary, at 2521 1160

Hong Kong Monetary Authority
Hong Kong Association of Banks

10 April 2003