Banking proposal to charge a quarter-dinar fee for each cheque drawn on another bank
- The Central Bank has requested that banks wishing to impose a fee submit separate, individual applications.
- Key banking considerations include:
1. Enhancing the efficiency, speed, and security of transactions.
2. Harmonizing implemented practices among banks.
3. Strengthening operational efficiency within the banking sector.
4. Ensuring sustainable service delivery according to the highest standards.
5. The bank acts as a pivotal intermediary in verifying and processing checks.
As part of its plans to support digital transformation in the banking sector, local banks submitted a proposal to impose a fee on clearing house checks, set at a quarter dinar per check. This fee applies regardless of the check’s value—whether it amounts to millions or hundreds—and covers the bank’s role in transferring funds from the drawer’s account at one bank to the beneficiary’s account at another.
To process clearing house checks, banks perform settlements among themselves on behalf of the issuing customer, making these checks a backbone for non-cash payments and financial settlements.
According to data from the Central Bank of Kuwait for June, local banks recorded clearing and settlement transactions with each other during the first half of 2026 through bank checks, involving the Central Bank and the Kuwait Credit Bank. A total of 1.08 million checks were processed, valued at 8.326 billion dinars, compared to 1.162 million checks totaling 9.241 billion dinars in the same period in 2025. This represents a decline of 9.9%, equivalent to 915.4 million dinars.
Overall, clearing and settlement operations executed by banks among themselves grew by 4.56% during the first six months of 2026, amounting to 6.97 billion dinars, reaching a total of 159.74 billion dinars, compared to 152.77 billion dinars in the corresponding period of 2025.
In response to this proposal, the Central Bank requested that banks wishing to impose fees on clearing house checks submit individual applications (“each bank separately”). Each application will be subject to regulatory review to determine its feasibility and be decided upon based on the supporting arguments provided.
1 - This supports the banking and general trend toward reducing the use of checks as a traditional payment method, especially amid advancing technology. Imposing a fee of a quarter dinar on clearing house checks encourages customers to shift toward electronic payment methods and digital channels, aligning with modern banking developments.
6 - Although the clearing cycle appears straightforward, check processing relies on complex coordination of legal, financial, and logistical steps that must align seamlessly to facilitate the process.
It also requires precise verification of details, as each check undergoes a strict validation process where the bank confirms the authenticity of the signature, date, beneficiary name, and amount in both words and figures. This makes the bank’s role pivotal, acting as an intermediary to verify and process checks. This responsibility demands meticulous attention to detail and adherence to regulatory standards, constituting a banking service that, in the view of the proposing banks, justifies the imposition of a fee for its provision to customers.
Furthermore, the clearing cycle varies in length depending on the type of check. A local check may be settled within one day, whereas an external check may take several days. Unpaid checks are returned to the beneficiary if settlement fails due to insufficient funds or discrepancies in details, accompanied by a reason for non-clearance, which triggers further procedures within banking systems.
