1. Types of Cheque in Thailand
In Thailand, cheques are divided into two categories; intra-provincial cheque and inter-provincial cheque. Intra-provincial cheque is a cheque that the collecting branch and the paying branch are located in the same clearing area whereas, for inter-provincial cheque, the collecting branch and the paying branch are located in different clearing areas.
2. Thailand’s Cheque Clearing Systems
In the past, there were three cheque clearing systems. For intra-provincial cheques, Electronic Cheque Clearing System (ECS) had been in operation for Bangkok and vicinity, while Provincial Cheque Clearing System had been used for all other provinces. Both systems were processed on a one-day clearing basis. Though, inter-provincial cheques were cleared through Bill for Collection System which took 3 – 5 business days for clearing process to be completed.
At present, these systems are replaced by the new cheque clearing system called Imaged Cheque Clearing and Archive System or ICAS which integrates those 3 systems into a single system. All types of cheques can now be cleared via ICAS within only one business day.
2.1 Electronic Cheque Clearing System (ECS)
The Electronic Cheque Clearing System or ECS had been in effect from July 1996 to April 2012 and was operated by the Bank of Thailand’s Electronic Cheque Clearing House (ECH). The ECS had been in service for Bangkok and vicinity. According to this system, cheque data would be sent online to the ECS by the sending banks, while the physical cheques would be delivered to the ECH for reading, sorting and verification against the cheque data received earlier. The process took place within the same day, allowing customers to withdraw the fund from their accounts on the next business day.
2.2 Provincial Cheque Clearing System
Provincial Cheque Clearing System had been improved in order to provide a more efficient intra-provincial cheque clearing system together with a more flexible cash management for member banks as well as reduction in costs and settlement risks. Cheque data cleared via the system were sent offline by which sending banks entered individual cheque information into the system and copied all information to media. Sending banks would sort the physical cheques, in order to group them by paying banks, before sending them together with the media containing cheque information to the clearing house. A net clearing position for each bank branch is then calculated via BAHTNET within the same business day.
2.3 Bill for Collection
The Bill for Collection or inter-provincial cheque clearing system was the clearing procedure for cheques in the case where a collecting branch and a paying branch were located in different clearing areas. The clearing process should not exceed five business days. There were two alternatives through which sending banks could send inter-provincial cheques for fund collection, including
1) the provincial clearing house of the paying bank's area where the sending bank had to deliver cheques to its branch, located in the same clearing house as the paying branch. Then, the cheques were cleared through the provincial cheque clearing system for one-day clearing process. The sending bank had to complete the whole clearing process within five business days next to the date of deposit.
2) the headquarters in Bangkok where cheques were sent for clearing via Bill for Collection System at ECH. This alternative was generally used when the sending bank did not have a branch within the same clearing house as the paying bank. The clearing process would take three business days, in which the day the cheques reached the ECH was reckoned as the first day.
2.4 Imaged Cheque Clearing and Archive System (ICAS)
The Imaged Cheque Clearing and Archive System or ICAS is an image-based cheque clearing system where cheque images are used for verification and authorisation and in turn eliminates the need for transportation of physical cheques in the collection process, allowing one-day clearing for cheques nationwide. When a cheque is deposited, the sending bank captures both the front and the back of the cheque into cheque images before preparing the data related to the cheque in order to send them online to the BOT’s Electronic Clearing House (ECH). Cheque images and data will be sorted by the ECH before being sent to the appropriate paying bank for verification and approval of payment. In the case where payment is refused, it is the sending bank’s responsibility to return the physical cheque, notify cheque return, and send debit slip to the depositor. The cheque data and images will be stored in the ICAS to be used as evidence in legal matters and in court instead of physical cheques. On 3 February 2012, the BOT and member banks launched ICAS in Bangkok and vicinity, nationwide coverage is expected to be completed by the end of 2013.