The incidence of returned cheques submitted by Bahrain’s commercial banks to the Bahrain Monetary Agency (BMA) has been nearly halved in the past 10 years.
Returned cheques represented 2.36% of the total number of cheques written by consumers and processed by the BMA Clearing House during 2004, compared with 4.56% in 1995.
The BMA processed a total of 2.25 million cheques written by consumers during 2004. This was an increase of 5.5% over the 2003 figure of 2.13 million cheques and a 15% increase over the 1995 figure of 1.96 million cheques.
The total value of all cheques processed by the BMA rose to a record BD2.3 billion in 2004, an increase of 14% over the 2003 figure of BD2 billion and double the 1995 figure of BD1.1 billion. “Consumers in Bahrain are, clearly, increasingly using cheques as a mode of payment,” said Shaikh Salman bin Ahmed Al Khalifa, Director, Banking Services, at the BMA.
“The BMA is committed to maintaining confidence in the use and acceptability of cheques as a payment instrument.”
The number of returned cheques declined to an all-time low of 53,109 in 2004, a decrease of 40.5% over the 1995 total of 89,328 cheques.
The value of retuned cheques also reached a record low of BD43.5 million in 2004, a decrease of 11% over the 1995 figure of BD48.8 million.
The incidence of cheque abuse, ie cheques returned due to insufficient funds in the account, account being closed or the cheque being referred to the drawer, also declined to a record low.
Such cheques numbered 25,250 in 2004, representing 1.12% of total cheques processed. In 1995, such cheques totaled 59,025, constituting 3.01% of total cheques written that year. The value of such cheques declined to BD16.8 million in 2004, compared to BD29.4 million in 1995 and BD16.9 million in 2003.
The steady decline in the phenomenon of returned cheques is largely due to the implementation of the Regulation Relating to Penalty System for Dishonoured Cheques, which came into effect from the beginning of 1997.
“We are particularly focusing our efforts on reducing the incidence of cheque abuse, as this can imply mal-intent on the part of the cheque-issuer. And, as the use of cheques as a method of payment continues to rise in the domestic market, there is a continuous need to eliminate the phenomenon of bad cheques,” said Shaikh Salman.