Banks agree on handling weekend cheques

The city's banks have agreed to unify their handling of cheques after the introduction of five-day clearing in September by freezing the processing of cheques - including those issued by themselves and other banks - on non-clearing days.

The arrangement, agreed by banks at a Hong Kong Association of Banks (HKAB) working group meeting yesterday, means that cheques deposited on Friday will not have funds made available until the following Monday. Accordingly, funds will only be made available on Tuesday for cheques that are deposited on Saturday.

The HKAB discussion was prompted by the switch from 51/2-day clearing to five-day clearing. Some banks, especially smaller ones, are concerned that they would lose their competitive edge to bigger rivals who could clear intrabank cheques faster by taking advantage of business days for over-the-counter service that are designated as non-clearing days, mainly for the Saturday half-day.

The situation is further complicated by some banks' decision to operate seven days a week even under the five-day clearing regime. Some banks suggested closing all counter service on Saturdays and other non-clearing days as a simple solution to the situation, according to a source close to the HKAB discussion. But the suggestion was met with resistance from banks keen to continue counter service on non-clearing days.

The source said the banks were still divided over whether interest should be paid on the day of deposit or not until the following Monday after banks move to the new system on September 4.

'Some details still need to be discussed. We hope a consistent approach can be reached within a week,' association chairman Peter Wong Tung-shun said.