The Bangko Sentral ng Pilipinas (BSP) has issued amendments to the regulations on the return of banks’ bounced checks, and on the rollout of the “Intraday Settlement Facility” (ISF).
These are part of BSP’s broader policy reforms aimed at further enhancing the efficiency and safety of the country’s payment system.
Currently, banks have until the next banking day to return bounced and defective checks to the presenting bank, with the transfer of funds to the drawee bank dated on the day of the check’s deposit.
This practice of retroactive dating, however, causes changes in the balances of banks’ settlement accounts with the Philippine Payments and Settlements System-Plus (PhilPaSSplus), the BSP-operated facility that enables check settlement.
To mitigate settlement and liquidity risks that may arise from the mismatch, the revised rules provide that banks may return high-value, “not sufficiently funded” (NSF) and defective checks as early as the day these are deposited.
Banks will still be allowed to return NSF and questionable checks the next banking day, but settlement will no longer be backdated.
As a result, the amended check policy ensures certainty of funds transfer from the check issuer to the payee. Hence, aside from improving confidence in the check clearing and settlement system, the enhanced policy enables better fund management among check users.
