Parliament to consider new law to allow partial payments by cheque

TDT | Manama

Daily Tribune – www.newsofbahrain.com

The House of Representatives’ Financial and Economic Affairs Committee is currently considering new legislation proposed by the government, which aims to significantly reform the existing regulations governing cheque transactions. The government’s memorandum to parliament emphasizes the need for these changes, citing the negative aspects revealed in the practical application of cheque transactions.

The proposed law aims to address these issues by introducing a number of changes and new provisions.

One of the most important features of the new law is the introduction of partial payment by cheque.

This provision requires banks to make a partial payment of a cheque if the account balance is insufficient to cover the full amount, unless the holder expressly refuses to accept a partial payment.

The law further provides that the holder may re-deposit a partially paid check, and the drawer is required to mark the check with the details of each partial payment. The original check must be returned to the holder along with a certificate confirming the partial payment.

Statute

The proposed law also requires the Central Bank of Bahrain (CBB) to issue regulations specifying the conditions, rules and procedures for the implementation of partial cheque payments, including both cash payments and settlement through book-entry methods such as account credits, bank transfers, settlements or other methods determined by the bank.

In addition, the law states that if a check is returned due to insufficient funds or partial payment, the credit history of the issuer will be noted.

The CBB will issue regulations specifying the criteria and procedures for such marking, as well as the procedures for its removal.

Transactions

If passed, the new law could significantly impact the way check transactions are conducted in Bahrain, potentially creating a more flexible and efficient system for individuals and businesses alike.

This will also reduce the number of cases of bounced checks referred to the prosecutor’s office.

According to recently published official statistics, the number of cheques returned for financial reasons decreased slightly – from 3,215 in the first half of 2023 to 3,102 in the first half of 2024, but their value increased from BD7.8 million to BD9.0 million.