Financial institutions asked to adopt modern payment system

In a bid to foster a modernised financial system, government has challenged all financial institutions to embrace electronic transactions. The Minister of Finance, John Rwangombwa, says that in order to achieve strong and sustainable economic development, there is need for a strong and modern financial system. “We want to reduce cash payments; so we want banks to go electronic in all payment systems,” he told bankers, last week, at the launch of the Central Securities Depository (CSD). The CSD is one of the components of the Rwandan Integrated Payments Processing System (RIPPS) — a national system aimed at facilitating electronic transaction of cash, securities and equities. The CSD will ease the registration and tracking ownership of bonds and private equities traded at the Rwanda Stock Exchange (RSE), which was launched late last year. The Minister added that financial institutions should roll out Automated Teller Machines (ATMs) that accept international cards. “We want you to create point of sales and enable our travellers to transact business when they are here.” The Governor of the Central Bank, Claver Gatete, will ensure that ownership of the securities is only transferred once payment has been irrevocably received by the seller. He underscored that in order to ascertain its effectiveness, an external auditor into the system is planned next month. The audit is also expected to improve the system. The Governor noted that the demand from users is overwhelming, which makes the system unique for other payment systems. “For other central banks, they have a clearing house or have Real Time Gross System-RTGS and stop there but we have added another component that is trading both public and private securities and this is what makes it quite unique.” Celestine Rwabukumba, the Operations Manager of Capital Market Advisory Council (CMAC) said that CSD has been a useful since it has trimmed the trading process from T+5, where transactions are settled after five days to T+2 where they are settled after two days. He said it is safer and reliable between the brokers and the investors. The Governor noted that the system is currently trading Blarirwa shares and very soon it will start trading bank of Kigali’s shares adding that by the end of year the country will be sure of the perfect payment system you can find anywhere. Ends

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Financial institutions asked to adopt modern payment system