MUSCAT, SEPT 23 - The number of bounced cheques recorded in 2017 jumped 16.87 per cent to over 436,000 cases in 2017, according the Central Bank of Oman (CBO). The incidence of dud cheques – instruments authorizing the withdrawal of a specific amount from the drawer’s account – has been on the increase in recent year. It reached a high of 373,082 cases in 2016, up a hefty 32.2 per cent jump from the previous year’s tally of 282,209 cases, according to CBO figures. Insufficient funds remained the leading reason for unpaid cheques in 2017, accounting for 77.24 per cent of bounced cheques, the apex bank stated in its newly published ‘Financial Stability Report 2018’. In around 10 per cent of the total, the drawer’s account was either ‘Closed’, ‘Frozen’ or ‘Transferred’. MICR encoding errors were cited in 2.4 per cent of the cases.
Under the Oman Penal Code, a dishonoured cheque is potentially a crime if proven by Public Prosecution that there was intent to defraud the intended beneficiary of the cheque. Penalties can include jail terms ranging from three months to two years in addition to fine of up to RO 500.
However, not all instances of dishonoured cheques are referred to Public Prosecution for criminal action. Roughly, one per cent of the total number of unpaid cheques end up in criminal courts. The great majority are settled after the issuer is reminded that there are insufficient funds in their accounts.
The total number of cheques cleared by the banking system during 2017 also grew 4.53 per cent to 4.64 million, up from 4.44 million in 2016, according to the CBO Financial Stability Report.
The Electronic Cheques Clearing (ECC) system – one of three payment systems currently operated by the CBO – continues to lead payments with a total value of RO 16.68 billion in 2017. This represents an increase of 0.15 per cent from RO 16.66 billion in 2016, according to the apex bank.
“As the routine practice of moving paper-cheques decreases and more cheques are now being transferred electronically, the payment systems provides for a more secure medium that is efficient and drives down the overall cost,” the Report said.
In second place was OmanNet payments with a value of RO 3.3 billion, representing a 11.3 per cent increase over the previous year. For the banks operating in Oman, the OmanNet Switch provides a gateway to the other switches in GCC countries. OmanNet has already established links with Kuwait (KNET), Bahrain (BENEFIT), Qatar (NAPS), United Arab Emirates (UAE Switch). A separate link with Saudi Arabia (SPAN) will be operationalized in a short time, the report said.
The Automated Clearing House (ACH) system handled payments totaling RO 2.8 billion in value. The Central Bank is currently redesigning ACH System for retail payments to transform it to a web technology based platform protected by powerful security standards.
The new ACH system shall consist of direct credit and direct debit transactions, coupled with Mandate Management System (MMS) for direct debit transactions, the Wages Protection System (WPS) module in collaboration with the Ministry of Manpower (MOMP), Electronic Bill Presentment & Payment (EBPP), and the Dispute Management System (DMS).
Conrad Prabhu
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