Commercial banks in Zambia have advised their clients to stop issuing post-dated cheques beyond Dec. 31, due to the rebasing of the local currency, the Times of Zambia reported on Wednesday.
Zambia is set to rebase its local currency kwacha by knocking off three zeros and the rebased currency will become effective on Jan. 1, 2013, but will run side by side with the old currency for a period of six months.
According to the Bankers Association of Zambia, an umbrella body of commercial banks in the country, this is meant to allow for the smooth transaction.
“In order to facilitate for the smooth transaction, customers are hereby informed to desist from issuing post-dated cheques as those beyond Dec. 31 will be cashed in rebased currency,” the association said in a statement carried by the newspaper.
The statement said if a cheque was issued in the old currency, but post-dated beyond Dec. 31, the amount to be paid out from the account could be more than the rebased amount.
“For example, a cheque for 100, 000 Zambian kwacha in the old currency beyond the Dec. 31, the amount that will be paid will be 100, 000 kwacha in the rebased currency instead of 100 kwacha in the new currency,” the statement added.
It said in order to avoid risks, customers should avoid issuing post-dated cheques.
On Jan. 23, the Zambian government approved the recommendation of the central bank to rebase the national currency, an idea initially mooted in 2003 when the current currency structure was implemented.