Regulation on the Standardization of Cheques

Maputo, June 1, 1999

NOTICE No. 08/GGBM/99

Subject: "Regulation on the Standardization of Cheques"

The introduction of electronic Clearing and Payment services in the Payment System in Mozambique must necessarily be preceded by the Standardization of Cheques, which will not only allow for a considerable reduction in financial intermediation costs but also impart greater security and speed in their settlement, factors important for the consolidation of the National Payment System.

In this context, under paragraph 2 of Article 7 of Law No. 5/98 of June 15 and Article 94 of Law No. 28/91 of December 31, and having approved the Regulation on the Standardization of Cheques, which constitutes an annex to this Notice and is an integral part of it.

This Notice enters into force immediately.

REGULATION ON THE STANDARDIZATION OF CHEQUES CHAPTER I OBJECT AND SCOPE OF APPLICATION

Article 1 (Object) This Regulation aims to establish rules for the Standardization of Cheques to be enforced in Mozambique and to define the technology to be adopted in the printing of characters on the magnetic recording band of cheques.

Article 2 (Scope of Application) This Regulation applies to the following entities: a) Credit Institutions authorized to operate in Mozambique; b) Other entities that the Bank of Mozambique may determine.

CHAPTER II PRINTING OF CHEQUES

Article 3 (Standard Cheque Model)

1. Cheques must be printed in accordance with the specifications contained in the "Standard Cheque Model," annexed to this Regulation.

2. The technology defined for the printing of characters on the recording band of cheques is "Magnetic Ink Character Recognition - E13B," technically known as "MICR-E13B."

Article 4 (Post-marking of Value on Cheques)

1. Post-marking on the "magnetic band" of characters relating to the value of the cheque is not mandatory; however, banks participating in the Cheque and other title Clearing Service must adopt efficient control processes, in order to monitor the future electronic processing of documents.

CHAPTER III MICROFILMING AND KEEPING OF ORIGINALS

Article 5 (Execution Norms) The execution of cheque microfilming services must comply with the norms contained in Law No. 5/98 of June 15 and Notice No. 8/GBM/98 of November 3.

Article 6 (Period for Keeping Originals) The period for keeping the originals of microfilmed Cheques referred to in paragraph 1 of Article 15 of Law No. 5/98 of June 15 shall be counted from the date of payment or settlement by the Clearing House.

CHAPTER IV FINAL PROVISIONS

Article 7 (Transitional Period)

1. A period of one year, counted from the date of entry into force of this Regulation, is fixed, during which cheques with the new standard and those currently in use by Banks may circulate simultaneously. After this period, only those issued within the timeframe fixed in this article will be settled.

2. The implementation of the technology defined in paragraph 2 of Article 3 of this Regulation should occur within the same period fixed in paragraph 1 of this article.

Article 8 (Clarification of Doubts) Doubts that arise in the implementation and application of the provisions of this Regulation and its annexes will be clarified by the Issuance and Treasury Department of the Bank of Mozambique.

STANDARD CHEQUE MODEL

SPECIFICATIONS 1 - Dimensions of the Cheque:

a) length: 174 mm, with a tolerance of +/- 2mm,

b) width: 76 mm, with a tolerance of +/- 2 mm

2 - Paper Characteristics:

a) weight per m2: 96g, with a tolerance of up to 5% more or less b) thickness of 0.1 to 0.127 mm c) rigidity (Taber 5 - model 5): 3 to 4.5 in the machine direction d) Surface: "Sheffield" 72 -125 -10 cm3 /mm; "Bekk" 50 - 120 seconds e) tear or rupture (Elmendorff): minimum of 40 grams in both directions f) porosity (Gurley): 25 seconds for 100 cm3 of air g) relative humidity: all analyses must be carried out with a relative humidity of 50% and at a temperature of 23º; h) wax resistance test: the document must withstand a wax resistance test equal to Denison 16A i) magnetizable particles: paper manufacturers and printing houses must ensure that there is a minimum quantity of magnetizable particles in the composition of the paper (iron, etc.) j) The cheque admits, at most, 30% of dye diluted in white k) The cheque must contain and maintain the necessary security requirements, such as indelible paper and artistic background. l) In general, in addition to the above specifications, the paper must comply with C.B.S.l specifications (technical term related to paper quality specifications used in the manufacture of cheques), which is used in South Africa, and adopted by the Bankers' Clearing House of England.

3 - Layout and Filling of Cheque Identification Fields:

Observing the positions indicated in the standard model, the delimitation of fields and spaces must be compatible with the information to be inscribed in them:

ON THE FRONT: a) Upper strip: mandatory printing of the Bank's name, client's name, cheque number, and Branch name. The remaining spaces in this strip may be used at the Bank's discretion, such as printing the logo.

b) Second strip: (intended for the issuer's signature, cheque value in figures; location and date of issue of the cheque), comprising: I - On the left, the expression "SIGNATURES" centered in the field; II - On the right: three fields, which must be headed by the expressions: • expression "pay by this cheque", with a reserved line for the placement of the cheque value in figures. • expression "place of issue", with a reserved line for the specification of the place of issue in full: • "date", with a reserved line for the specification of day/month/year in figures.

c) Third strip: (intended for the indication of the beneficiary's name and cheque value in words), headed by the expressions:

I - expression "to the order of", with a reserved line for the indication of the cheque's beneficiary's name; II - expression "in the amount of", with two reserved lines for the specification of the cheque value in words, not admitting the printing of any other words or symbols in the underlined spaces in the standard model.

d) Fourth strip: (intended for the printing of magnetic characters), for which strict observation of the following specifications and instructions is required: I - The recording band with magnetic ink occupies the entire horizontal length of the cheque, at a height of 16 mm, starting from the base of the form, reserved exclusively for this purpose and called the "magnetization strip";

II - The standard character for magnetizing cheques and other banking documents is that of the Encoded Magnetic Character System E13-B - MICR-E13B, analogous to that used by SADC countries, noting that each character, with its respective interval, occupies 3.175 mm horizontally.

III - Centered within the "magnetization strip", 6.35 mm from the base of the form, and 7.937 mm from the left margin, the "magnetization band" must be delimited, with a length of 156.126 mm and a height of 3.30 mm, over which the magnetic character reading head acts;

IV - The "magnetization band" accommodates 4 fields indicated in the respective model, with the following structure (note that the fields should not be headed by the designations provided): Field 1: interbank zone: composed of 10 characters.

One sorting character (Sorting Code Symbol 10)

Two characters reserved for use within the SADC framework (country code) - initially 00

Two characters corresponding to the Bank code, without check-digit; Four characters corresponding to the branch code, without check-digit. One sorting character (Sorting Code Symbol 10)

It must be 7.937 mm distant from the left margin of the "magnetization band", occupies horizontally an extension of 31.75 mm, corresponding to the 10 positions of magnetic characters.

Field 2: account number: composed of 13 characters Twelve characters corresponding to the account number, the account check-digit may be included in the same. One character 12 to the right of the twelve characters corresponding to the account number (On US Symbol 12).

Immediately to the right of Field 1, it occupies a horizontal extension of 44.45 mm, corresponding to a blank space of 3.175 mm and the 13 positions described.

Field 3: cheque number: composed of 11 characters One character to the left of the field (On US Symbol 12). Ten characters corresponding to the cheque number.

Immediately to the right of Field 2, it occupies a horizontal extension of 38.10 mm, corresponding to a blank space of 3.175 mm and the 11 positions described.

Field 4: type of cheque:

Two characters corresponding to the type of document, for which purpose the following coding is defined: common cheque - code 01

Immediately to the right of Field 3, it occupies a horizontal extension of 9.53 mm, corresponding to a blank space of 3.175 mm and the 2 positions described.

ON THE BACK:

The back of the cheque will be freely used by banks, however, space must be preserved for the placement of clearing stamps.

4 - Printing and manufacturing of the cheque form; a) The cheque form must be printed in any color, with indelible ink and firm tone;

b) Cheques can be printed on flat sheets or continuous forms, in the latter case, they must be detached by guillotine, so that straight and smooth edges are obtained on the lower and right extremities, used as references in the mechanical reading process.