CICS OM 17-016

Updated: Dec 4, 2020

CICS OM No. 17-016

04 July 2017


T O : All Member/Participant Banks

R E : SPECIAL CLEARING/DIRECT PRESENTATION OF RETURNED CICS ITEMS DUE TO TECHNICALITIES

1. It is provided in Section 1.1 of CICS OM No. 17-007 that special clearing of items which the Drawee Bank (DB) does not like to pay due to technicalities is being allowed by way of direct presentation of the item to the Presenting Bank (PB), subject to the consent or agreement of the latter.


2. As stated in the guidelines, when such consent or agreement is obtained by the DB, it should deliver to the PB the Special Return Check Advice (SCRA) together with the Clearing Receipt/Charge Slip (CRCS) no later than 11:00 AM of the next banking day (i.e., clearing day following the date the item’s image is transmitted to the DB for clearing through CICS). The acceptance by the PB of the return of the item shall be manifested by the signature/s of its authorized representative/s on the CRCS.


3. Based on gathered feedback however, not all Member Banks observe this 11:00 AM deadline; in most cases, both PB and DB would agree on the time of delivery that goes beyond banking hours thereby making the 11:00 AM deadline irrelevant.


4. As a result, some banks are citing the non-conformity to the 11:00 AM deadline as a major factor for their inability to make funds available the next banking day (T+1). Delayed availability of funds to the customers defeats the very purpose of the Check Image Clearing System (CICS).


5. We wish to remind that pursuant to Section 16.3 of our CICS Rules and Regulations, the PB warrants that the deposited Check is complete and regular on its face which means that prior to submission/transmission of a Check’s image for clearing, the PB shall have already scrutinized the Check for technical deficiencies so that the DB can focus more on the verification of Drawer’s signature through image.


6. The image and electronic payment information which are contained in Image Cash Letter (ICL) file are then immediately pushed to the DB by PCHC as soon as they are received. This means that the DB can perform immediate validation/verification of its incoming images/data (or ICLs) and can do same-day ‘pay/no pay’ decision or call clients to confirm any technicalities or deficiencies on the signature of Check/s issued.


7. In case items are to be dishonored, the DB has then 2 clearing windows to choose from in tagging the dishonored item/s to be returned. This is within the same regular clearing session OR during the Morning Returns Clearing Window which is immediately opened after the 4:30 PM cut-off time of same day until 7:30 AM of the next banking day.


8. In view of the foregoing and in order:


a) for the remaining non-compliant banks to meet the T+1 fund availability requirement; and


b) eventually for all banks to uniformly make funds available earlier than 3:00 PM,


we are adjusting the reference delivery deadline of special clearing of returned items from 11:00 AM to 10:00 AM effective 04 August 2017.


9. We wish to emphasize that the ultimate goal of CICS is to make funds against issued Checks available when the bank opens the next banking day. As such, we will again evaluate three (3) months after August 2017 if there is a need for the system to cover special clearing of returns. It is to be noted that this special clearing arrangement is done outside of the CICS system and its execution/implementation is prudentially anchored on the agreement between the Drawee and the Presenting Banks.


10. To assist our Member Banks with big volume of returns on days after holidays and peakdays, we will make representation with the BSP to extend their Morning Returns cutoff for clearing results to give ample time to process dishonored items.


11. We count on the support and mutual cooperation of all Member Banks.

CICS OM No.17-016
.Special_Clearing Direc
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