Local Currency Clearing

The clearing house facilitates the transfer of payments between banks operating in Kenya on behalf of their customers. It provides the facility for the exchange of checks and electronic transfers.

The clearing of local and upcountry cheques is centralized in Nairobi. The settlement of the items is automated via diskette and all cheques are MICR encoded. Clearing takes place twice a day at 10.00 a.m. and 12.00 p.m. The second clearing session relates to high value items delivered during the 10.00 a.m. session. No new items are delivered to the clearing house at this session. There is a foreign currency clearing house for a few member banks. All foreign currency checks are exchanged by member banks and settlement takes place by foreign currency draft or telegraphic transfer. Foreign currency clearing is still manual and takes place 3 times a week.

Value dating of transactions depends on the locale on which these are drawn. The clearing period for local and upcountry checks is 4 days and 10 days for remote areas. However, checks with a value greater than Kshs.10 million have a clearing period of 2 days. Remote areas are those locations that are difficult to reach. There are charges for banking checks that are not drawn on Nairobi.

Local Foreign Currency Clearing

A clearing house exists to enable the settlement of foreign currency checks drawn on banks present in Kenya. This facility reduces the clearing time taken to settle interbank accounts. There are 7 members of this clearing house and Citibank N.A is a member. Clearing takes place 3 times a week and settlement occurs same day for USD transactions and next day for all other currencies.