MUSCAT: An estimated 399K cheques with a face value totalling around RO 656 million went dishonoured last year, largely for want of adequate funds in the drawer’s account, the Central Bank of Oman (CBO) has revealed.
This compares with around 485K cheques that went unpaid in 2020, , the apex bank stated in its Financial Stability Report 2021, issued last week.
Dishonoured cheques – also known as bounced or dud cheques – can attract prison terms and / or fines if they are not honoured upon their re-presentment, unless the drawer has a valid explanation to avoid legal action.
Significantly, ‘Insufficient Funds’ remained the dominant reason for cheques going unpaid, with around 312K – representing 78.2 per cent of the total – being returned to the drawer last year, according to the Central Bank.
A further 47K cheques (11.7 per cent of the total) were returned on account of the drawer’s account being ‘Closed / Frozen / Transferred’. However, in the great majority of the cases, the cheques going unpaid was because of “financial reasons” and not technical factors, the Central Bank stated.
In value terms, however, bounced cheques continue to follow a seesawing trend. The phenomenon hit a peak of RO 1.519 billion in 2017 (427k returned cheques) before slumping a year later to RO 856 million (469K returned cheques).
In 2019, to total was back at RO 1.367 billion (379K returned cheques) before plummeting to RO 547 million (486K returned cheques) in 2020.
Of late, bounced cheques are on the downtrend as paperless digital and electronic transactions pick up pace in the Sultanate of Oman.
“Due to the rise of electronic alternative payments, there is a remarkable decline in the use of cheques for payments in the last two years: 3.8 million cheques in 2021; 4 million cheques in 2020 compared to more than 4.7 million cheques in 2019,” the Central Bank stated in its report.