In conformity with a directive from the Bank of Israel banking supervision department, the length of the business day at banks is to be extended from today, to end at 6:30 pm instead of 3:00 pm. Friday’s business will be reduced by one hour, and will end at 2:00 pm.
The extended day will impact primarily on transaction values for the day in question. There will no longer be any difference between a transaction during morning hours and one transacted the same afternoon, with every transaction recorded at a uniform value throughout the day. Funds deposited or withdrawn by 3pm had, up to now, been recorded at same day value date, while those deposited or withdrawn after 3pm were recorded with a value date of the following day. Under the amended regulation, all transactions will be recorded with same day value date until 6:30pm.
The new rules will also apply to transactions conducted through automatic cash points. Transactions executed after 6:30pm will be recorded with the next day's value date.
Some banks have changed their opening hours. Israel Discount Bank (TASE: DSCT), for example, extended its hours at one third of its branches to 8pm. First International Bank of Israel (TASE: FTIN1;FTIN5), on the other hand, has shortened business hours at its branches by half an hour, from 7pm to 6:30pm due to the difficulties involved in moving banking mechanisms one day forward while branches are still open for business.
The extended business hours are designed to enable better coordination between business and opening hours at banks and improve efficacy in other areas such as transactions with markets in Israel and overseas. The new regulations have been put in place ahead of the launch of Real Time Gross Settlement system (RTGS) which is due to be introduced during the first quarter of 2007.
The RTGS system will reduce clearing times and enable safe and immediate transaction of payments throughout the day, thereby preventing cancellation of transactions at a later time. At present, clearing systems do not provide same day service and as a result, delays in processing of financial transactions can lag as much as 24-72 hours.
Published by Globes [online], Israel business news - www.globes.co.il - on February 21, 2006