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NOTHING IN LAW SAYS BANKS CAN REFUSE FOLDED, STAPLED CHECKS – PIMENTEL

Senate President Koko Pimentel reminded all banking institutions operating in the country that they cannot “change the Negotiable Instruments Law” by refusing to accept folded or stapled checks when these are presented for deposit or payment.

Pimentel made the remark after receiving reports that banks continue to refuse honoring checks that bear folds or small puncture holes despite a Bangko Sentral ng Pilipinas (BSP) directive made in early 2017 that banks should not be rigid in their check policies.

The BSP has mandated banking institutions, through the Philippine Clearing House Corporation (PCHC), to shift to the more modern Check Image Clearing System (CICS), setting the industry’s compliance deadline to January 20, 2017.

PCHC processes an average of 700,000 checks daily, with an estimated value of P135 billion.

With the CICS system in place, only the digital images of checks and the electronic payment information will be transmitted to the paying bank which allows a shorter turnaround time for funds to be credited to a depositor’s account.

Pimentel lauded this shift to better electronic banking but noted that banks needed to be more pro-consumer and not unduly nitpick as long as checks retain their “negotiability” under the law.

“If we cannot read what’s written or printed on the check, that’s a different story altogether, but if it’s just folded, it’s still a valid check. There’s nothing in the Negotiable Instruments Law that says a folded or stapled check cannot be used or negotiated.”

“Bank patrons usually fold checks because these easily fit in wallets or purses. They do it for convenience and security. When they go to the bank, the checks are not honored or the customers are sternly reprimanded before the bank accepts the check, as if the customers did something wrong,” added the Senate chief, who topped the 1990 bar examinations.

Pimentel proposed that banks should use better image scanners rather than adding unneeded hassles and burdens on bank customers.

Banks should use better image scanners rather than adding unneeded hassles and burdens on bank customers.

“It’s a technology solution. All our banks’ imaging equipment should still be able to scan these checks even if these instruments bear folds or staple marks. If they need to upgrade their scanners, let’s coordinate with the BSP and the PCHC to determine whether legislation is needed to that effect. Let’s be mindful of the interests of our bank customers first and foremost.”

“Our economy is in the upswing. Government and the banking sector in particular should do more to facilitate, not hamper, business transactions. With advancements in technology, why do our banks appear to have regressed by still stubbornly insisting that customers present perfect checks? This simply has no basis in law.” Pimentel mused.

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