Media Releases
Published Date: 08 July 2002

Explanatory Brief : The Bills of Exchange (Amendment) Bill 2002

Date : For Parliament Sitting on 8 July 2002

The Deputy Prime Minister and Chairman of the Monetary Authority of Singapore ("MAS") today moved the Bills of Exchange Act (Amendment) Bill for the first reading in Parliament.

2   The Bill seeks to amend the Bills of Exchange Act for the purpose of establishing a Cheque Truncation System ("CTS").  Specifically, the amendments will allow for cheque presentment by electronic means and recognise the rights of a holder of an Image Return Document ("IRD"), which is a document that banks will issue instead of returning the original cheque when a cheque is dishonoured.

3   MAS conducted a consultation exercise on earlier drafts of the Bill in April 2002.  Comments and feedback from various public bodies were received.  MAS has reviewed and incorporated some of the comments in the Bill.


4   In the later part of this year, a new cheque clearing system called the CTS will replace the inter-bank movement of physical cheques with secure electronic transmission of cheque images.  CTS will enhance the banks' efficiency, reduce transportation and microfilming costs, and allow banks to offer new services, such as online enquiry on status of cheque clearance. 

5   CTS affects mainly the inter-bank clearing process and cheques will continue to be used by the public and accepted by banks for payment.  A key difference however is that banks will issue to the customer an IRD instead of returning the original cheque when a cheque deposited by the customer cannot be honoured.  An IRD is a banking document bearing the image of the cheque together with other related information. 


6   When a holder of a cheque deposits the cheque at his/her bank ("presenting bank"), the presenting bank will present the cheque to the drawer's bank1  for payment.  The existing Act requires the presenting bank to physically present the cheque to the drawer's bank.  The addition of Section 87A of the Act will allow this inter-bank presentment to be done by electronically transmitting an image and the payment information of a cheque instead of the cheque itself.  The drawer's bank, however, will still have the right to demand that the physical cheque be presented instead, if it deems it necessary.

7   The addition of Section 87B of the Act will allow for the presenting bank to issue to the holder, an IRD instead of returning the original cheque if the cheque cannot be honoured by the drawer's bank.  The IRD can be re-presented for payment at the same presenting bank.  The holder however, can request for the return of the original cheque itself.  As per a dishonoured cheque in today's context, the amendment to section 49 of the Act would allow an IRD to serve as a notice of dishonour to the drawer of the cheque.  The Bill also gives a person who has lost an IRD the same rights of recourse that are currently available to a person who has lost a cheque in its physical form.

8   In addition, the amendment to Section 86 of the Act clarifies that the new cheque truncation provisions in the Act that are applicable to cheques will also apply to other instruments such as cash cheques and banker's drafts.  Section 87C of the Act will allow MAS to make regulations relating to cheque truncation with the approval of the Minister. 

9   More information on CTS and IRD can be found on the ABS' website at

1 The drawer of a cheque is the person who signs and issues it.