KEPSS is Kenya’s Real Time Gross Settlement (RTGS) System and went live
on July 29th 2005. It is wholly owned and managed by the Central Bank of Kenya
(CBK).
An RTGS system is defined as a gross settlement system in which both processing
and final settlement of funds transfer instructions take place continuously
(i.e. in real time) from one bank to another. In RTGS systems the settlement
of payment transactions occurs on a transaction-by-transaction basis. The transactions
are settled individually, continuously and in real time in the accounts of the
participants in central bank provided that the sending participant has sufficient
covering balance or credit (settlement limit). Considering that money transfer
takes place in the books of the Central Bank of Kenya, the payment is taken
as final and irrevocable. RTGS systems mitigate systemic settlement risk inherent
in large value net settlements.
Benefits of an RTGS system-
- Real time funds transfer
- Finality of funds settlement
- Risk control mechanism
- Payments process simple
- Optimization of liquidity
- Efficient funds management
- Allows large value transfers between banks
- Enables fund movement between cities
- Permits on-line real time query of the funds position
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