Banks must now expedite cheque clearing
By Stephen Ndegwa, July 10, 2025In today’s global economy, speed in financial transactions is an absolute necessity. Yet in Kenya, banks continue to frustrate individuals and businesses with painfully slow fund-clearing processes, especially when it comes to cheques.
It is ironic that in a country globally celebrated for fintech innovation — home to M-Pesa and real-time mobile banking — cheque clearance can still take several days in certain cases, such as foreign-drawn instruments or exceptional compliance reviews.
This is more than just a minor inconvenience. It is a serious drag on cash flow, business operations and public confidence in the formal banking system.
What makes this even more frustrating is that the technology to fix the problem already exists. Kenya’s banking sector operates under the Real-Time Gross Settlement (RTGS) system for high-value transactions between banks.
Effective July 1, 2025, the Central Bank of Kenya extended RTGS (KEPSS) operating hours from 8:30 am-4:30 pm to 7 am-7 pm, a change aimed at boosting liquidity, efficiency and supporting Kenya’s transition toward a 24-hour digital economy.
So why aren’t banks leveraging this to speed up cheque clearing? The answer lies not in technical limitations but in entrenched institutional habits and outdated practices.
Banks are comfortable with the status quo, where they benefit from holding customers’ funds longer than necessary, earning interest or covering internal liquidity needs. Meanwhile, customers are left waiting, powerless to intervene.
Even with cheque truncation – where digital images replace physical cheques – Kenyan banks still hold on to the two-to-five-day timeline.
This delay is indefensible. When mobile money transfers between individuals and businesses are settled in seconds, it is absurd to claim that cheques must sit in a digital queue for days.
Kenyan banks are quick to boast about their digital transformation. According to the Kenya Bankers Association, over 99 per cent of transactions are now processed through digital platforms.
If so, why are cheques, especially from one local bank to another, not cleared faster?
Just as the Central Bank successfully modernised mobile payments, it should require banks to clear cheques within 24 hours, with longer holds allowed only in cases of suspected fraud or legal dispute.
Financial institutions must be nudged or pushed into aligning with the national digital agenda.
Consumers should also challenge delays, demand accountability and, where possible, migrate to financial service providers who offer faster access to funds.
Digital wallets, SACCOs, and fintech platforms are now viable alternatives.
Accelerating cheque clearing would inject much-needed liquidity into the economy, shorten payment cycles and strengthen public confidence in banking.
Faster access to capital enables businesses to expand, workers to be paid on time, and entrepreneurs to seize opportunities without unnecessary barriers.
Kenya’s vision of becoming Africa’s financial hub must include modern, responsive banking. The RTGS expansion laid the foundation.
Now it is time to dismantle the outdated systems that continue to slow us down and benchmark with international best practice.
The writer is a PhD Student in international relations