MUSCAT: The long-standing practice of banks to bounce cheques due to insufficient funds in the drawer’s account – the principal reason behind the vast proportion of cheques returned in the Sultanate of Oman – is slated for a major overhaul.
According to the Central Bank of Oman (CBO), Oman’s authorities are weighing measures to enable the partial fulfilment of cheques where funds may be deficient in the drawer’s account, in line with international practice.
“Oman is (..) working on modalities to introduce partial fulfilment of cheques. This would provide mechanisms to ensure the maximum possible cheque value is collected in the fastest and simplest way possible,” the Central Bank noted in its Financial Stability Report 2023 issued here last week.
Dishonoured cheques, which had been on the uptrend in previous decades, are trending downwards as transactions are becoming increasingly electronic in Oman.
Against 4.7 million cheques issued for payment in 2018, the tally slumped to 3.8 million cheques in 2022, in trend with the transition from paper-based payments to digital payments.
Returned cheques over this period dipped to 387K in 2022, down from 399K in 2018, according to CBO figures. In percentage terms, dishonoured cheques presented into the banking system accounted for 10.6 per cent of total cheque submissions in 2021. This figure declined to 10.3 per cent a year later in 2022.
Significantly, 309,728 cheques – representing 80.1 per cent of the total number of bounced cheques in 2021 — were returned due to insufficient funds in the drawers’ account.
A further 39,457 cheques (10.1 per cent) were rejected because the accounts were either ‘Closed’, ‘Frozen’ or ‘Transferred’. Regardless of the reasons cited, bounced cheques can invite legal penalties in the form of fines and imprisonment under Omani laws.
According to the CBO, some countries have begun authorising partial fulfilment of cheques where it is possible to cash a cheque for an amount less than the full amount written on the cheque.
“While typically a cheque would bounce if the full amount to honour it was not available in the drawer’s account, after the amendments introduced in some countries, banks are required to fulfil partial amounts of the cheque equal to the amount available in the drawer’s account, unless the cheque bearer rejects the option for partial payment,” the apex bank explained in the report.