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| Sunday, 03 August 2003 |
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LankaClear completes first year with Rs 29.6m profit The first Annual General Meeting of LankaClear (Pvt) Ltd was held in Colombo last week. The company completed its first financial and operational year on March 31, 2003, reporting a profit of Rs 29.6 million, R.B. Ekanayake, Chairman LankaClear (Pvt) Ltd said. LankaClear was incorporated to take over the activities of Sri Lanka Automated Clearing House (SLACH), a sub-unit of the Information Technology Department of the Central Bank of Sri Lanka. SLACH was established in 1988 to automate cheque clearing. Accordingly, computerised high-speed document processors (reader/sorter equipment) and new cheque leaves were introduced with Magnetic Ink Character Recognition band. This technique is used for automatic reading of data from a document into the computer system. The payment and settlement system developed significantly with the introduction of this system. After automation, cheque processing time was reduced, helping banks reduce the number of days taken for the task, he said. This was followed by the implementation of electronic fund transfer services for inter-bank transactions through the Sri Lanka Inter-bank Payment System in 1993. This is an offline system. The business community, policy makers and the public wanted the payment and settlement system to continuously improve, enabling them to go in line with economic developments in the country. It was thought that the clearing house should be a separate body, independent from the Central Bank and Section 112 of the Monetary Law also has the required provisions. International experiences have revealed that independent clearing houses are more successful. To improve the commercial viability of clearing houses, payment and settlement systems will be continuously improved as demanded by Government policies and plans. Ekanayake said the Central Bank considered these arguments and appointed a committee headed by its consultant, the late K. Sivagananathan, to forward the implications and recommendations. The recommendation was not to privatise, but to divest to service receivers. The bank also decided to be the major individual shareholder. Ernst and Young designed the layout of the new company, incorporated on February 8, 2002 as LankaClear (Pvt) Ltd. SLACH activities were taken over from April 1, 2002. R.B. Ekanayake was appointed Chairman and Anil Amarasuriya, Managing Director Sampath Bank, Thilak Ranasinghe and B.A.C. Fernando, Deputy General Manager Bank of Ceylon, Dr Ranee Jayamaha, Assistant to the Central Bank Governor, P.D.J. Fernando, Director IT Central Bank, T. Karunasena, Deputy General Manager People's Bank, Yousuf Saudagar, Vice President Habib Bank Ltd, Rienzie T. Wijetilleke, Managing Director Hatton National Bank and S.N. Ahamed, Country Manager Habib Bank AG Zurich were appointed Directors. L.J. Wickramasinghe, Chief Manager SLACH, was appointed Chief Executive Officer. The modernisation of the clearing system depends on the participation of the Central Bank and other commercial banks, according to the Chairman. The divestment of SLACH to LankaClear has fulfilled all these requirements. During the first year of operations, the company was able to reduce cheque processing time by six hours (a 100 per cent improvement), an incentive scheme was introduced to replace unproductive overtime allowing LankaClear to reduce the number of days for cheque realisation. The company reported a profit of Rs 29.6 million during the first year of operations as a result of the introduction of new products, efficient use of resources and strengthened cash flow management. Financial liberalisation allowed it to invest excess money. A US dollar clearing system was introduced on October 1, 2002, reducing dollar cheque clearing time from 21 to three days. Online data capturing and settlement sort facilities were among the optional services introduced during the period. The banks benefited from the new products and were able to save their administrative time and costs. LankaClear is now evaluating the feasibility of introducing image-based cheque clearing, which will be a reality in the near future. Image is performed by capturing both sides of the cheque by a camera attached to reader equipment. This technology is known as Image Character Reading and is expected to improve the clearing, settlement and fund release timings. By truncating the cheque from the point of presenting the bank, LankaClear will be able to clear the cheques electronically and also automate all four legs of the cheque clearing process - Outward clearing, Inward clearing, Outward return and Inward return. "Development of the payment and settlement system by LankaClear would contribute to fulfil the Sri Lankan Government's vision of making the island the financial hub in the region," Ekanayake said. |
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