Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo said banks should start advising clients on the new check clearing policy, which would be implemented same-day instead of three, beginning next year.

In a press statement, Guinigundo also announced that the BSP's Department of Loans and Credit has started to accept overdraft credit line requests for banks needing liquidity assistance in light of BSP Circular No. 681, or the "Revised Check Clearing and Settlement Processes" which would take effect on January 1, 2011.

As of end-July, BSP's overdrafts amounted to P1.77 billion, unchanged since December, according to a report to the Monetary Board.

Guinigundo explained that the revised check clearing rules and its guidelines, approved by the Monetary Board last February, was arrived at after a series of consultations with industry groups including the Bankers Association of the Philippines.

"Banks were also asked to remind their clients that checks should only be issued if they are supported by sufficient funds on the day of issuance," the BSP quoting Guinigundo said. The official also assured the banks that BSP would continue to conduct public awareness campaigns starting in September.

The major change in the circular was that check issuers that have insufficient funds would no longer be given a chance to fund their accounts. The new overnight clearing line (OCL) policy would also effectively reduce banks’™ income from overdraft checks but they could still charge service and penalty charges for unfunded checks.

Banks slap an automatic charge of P1,200 for insufficient funds and another P1,000 for bounced checks if the check issuers fail to fund the accounts on time, given a three-day clearing schedule. Of the P1,200 charge, P1,000 is the service charge and the P200 is for the amount P40,000 or lower.

Another P200 is added for an additional P40,000 and so on.