Cheque value limit to prevent cashgate
The Reserve Bank of Malawi (RBM) says putting a cheque value limit on cheques would help to prevent a reoccurrence of the cash gate in the country.
RBM Deputy Governor for Economics Naomi Ngwira was speaking in Mangochi on Friday during a stakeholders meeting on the implementation of a K5 million cheque value limit for cheques issued.
Once implemented, banks will not accept any cheques whose value is above K5 million.
According to Ngwira, most of the money looted from government coffers in the cash gate were syphoned through cheques which were encashed over the counter.
“Of course we cannot completely eliminate cashgate because the people involved are always thinking of new ways of beating the system but putting a cheque value limit would help a great deal as the amounts involved would be reduced,” said Ngwira.
She said it was disappointing to note that cash and cheque transactions have dominated payment of goods and services in Malawi despite the recent introduction of innovative electronic payment solutions such as mobile money and internet banking.
The predominant cash and cheque transactions, according to RBM, have negative implications on the economy in terms of currency management costs, transaction costs as well as fraud.
“Furthermore, financial institutions are exposed to liquidity, credit and settlement risks arising from the cheque clearing process,” said Ngwira.
Bankers Association of Malawi (Bam) Executive Director Lyness Nkungula and Consumers Association of Malawi (Cama) Executive Director John Kapito hailed the proposal to introduce cheque limits in separate interviews.
According to Nkungula, the development would promote alternative sources of payments, thereby turning Malawi into a cashless society.
Nkungula said most countries in the world are moving away from cheques and cash, therefore the need for Malawi to follow suit.
On his part, Kapito said putting a ceiling on the amount of money on a cheque would also help against fraudsters who sometimes forge other people’s signatures.
The meeting was organised to update stakeholders in the progress made as well as to endorse July 1, 2015 as the takeoff date for the proposal.
However, representatives from the office of the Accountant General told the meeting that there were still a number of issues that were to be resolved on their side before they could commit to the July 1, 2015 deadline.