Oman sees 9.9% rise in cheque bounce cases

The number of bounced cheque cases recorded in 2018 reached 469,187 from 426,977 in 2017, according to the Central Bank of Oman (CBO).

This is an increase of 9.9 per cent over the previous year with insufficient funds the leading reason for bounced cheques (78 per cent).

According to CBO’s Financial Stability Report 2019, the total number of cheques subject to the clearing process increased by only one per cent to 4.7mn in 2018 compared to 2017.

Speaking to Muscat Daily, Maneesh Srivastava, CEO of Muscat Finance, said his company has been careful in accepting cheques in the last two years.

“We follow certain percentage criteria and if the customer does not fall within the parameters, then we don’t approve loans,” he said.

Srivastava said that borrowers need to fulfil their obligations of paying for the issued cheques. “People should be more careful before taking loans. Take loans as per your needs and your repaying capacity. As we now have Oman Credit Board, there is a need for companies and individuals to be more careful. If borrowers fail to meet their obligations, then this leaves a bad impression and no loans will be given to defaulters,” he said.

According to the CBO report, when people pay by cheques, there is an element of trust involved. Occasionally, cheques may bounce for several reasons.

‘Insufficient funds continue to top the list of reasons for bounced cheques (78.2 per cent), followed by account closure or ‘legally blocked’ account (12.6 per cent) and then encoding errors (1.9 per cent),’ the report said.

As for consumers’ point of view, the issue of bounced cheques is quite common. “The economic downturn in Oman has led to cheques bouncing. When you have financial issues, there is no option but to let cheques bounce and pay fine later which I have done many times. In other cases, finance firms demand some extra money to hold the cheque for a month without depositing it.

“In a way, it is good for people rather than letting the cheques bounce which is an offence,” Mohsin Rashid, a company bus driver, said.

Sudhakar Reddy, CEO, Al Habib, said that the issue of bounced cheques remains but has not impacted his real estate firm. “There are always some cases of bounced cheques but I tell my tenants to try and honour their obligations. Tenants need to understand that if a cheque bounces, it is a jailable offence. They need to be careful,” he said.

In the real estate sector, unfortunately, there is no other option than to accept cheques. “There is no advance payment system from clients and cheques are the best guarantee for property owners and dealers.”

Under the Omani Penal Code, a dishonoured cheque is potentially a crime if proven by the Public Prosecution that there was an intent to defraud the intended beneficiary of the cheque. Penalties can include jail terms ranging from three months to two years in addition to a fine of up to RO500. However, not all instances of dishonoured cheques are referred to the Public Prosecution for criminal action.

78% cheque bounce cases in Oman due to insufficient funds in the issuer’s account