Bahrain: New crackdown on dud cheques

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Bahrain - Con artists paying bills with bouncing cheques could lose everything that remains in their bank accounts even if it doesn’t match the full amount they owe.

A new comprehensive law to enable part-payment to be allowed as part of the process to fully recover funds is set to be drawn up by the government.

The Cabinet informed Parliament in writing that a proposed amendment to the 1987 Commerce Law by the Shura Council disregards multiple aspects that need tackling in other correlated laws.

The government has now urged newly-elected MPs, who will be in office later this year, to rethink the legislation.

“We acknowledge that this is a reccurring serious issue in which people are forced to wait for their due payments, or may never get them,” said the government. “However, relying heavily on amending one legislation opens loopholes in other laws that are linked, or other interconnected rules,” it added.

Comprehensive

“There has to be a new comprehensive law and we are working on it to enable part-payment, from whatever funds are available in a bank account, in the case of a bounced cheque.

“This would be built into the new law, while referencing and merging shield legislations like the 2006 Central Bank and Financial Establishments Law, the 1976 Penal Code and the 2021 Execution Law, in clear cohesion.”

The idea behind the amendments to the 1987 law have been backed by Industry and Commerce Minister Zayed Alzayani, Central Bank of Bahrain Governor Rasheed Al Maraj and Justice, Islamic Affairs and Endowments Ministry legal adviser Ismael Al Asfoor, as indicated in associated documents with the Cabinet’s reply.

“In principle, we have no objections to oblige banks to pay businessmen what is owed to them from money available in the concerned account,” said Mr Al Maraj.

“In the circumstances, partial payment seems to be the right solution in that businessmen will get part of what is owed to them, without disrupting the commercial and services process.”

Mr Alzayani said the move would ensure that cheques can continue to be used to conduct business without loopholes in the legislation.

“What the Shura Council wants is fair and guarantees the rights of businessmen when dealing with cheques, but fine details will require further study and adjustment,” he added.

Mr Al Asfoor said several countries have already started implementing this system which helps reduce anxiety over the use of dud cheques. “We are a legal body that looks into whether laws are applicable or not.”

In February this year, Shura member Mona Almoayyed offered an example that a BD1,000 cheque could bounce back even if there was BD999 available in the bank account.

She added that resulting court battle often drag on harming businesses.

Shura second vice-chairwoman Jameela Nusaif also said that if the drawer of the cheque had multiple bank accounts then the cheque should be honoured with funds from any one of them.

Member Sadiq Al Rahma, who proposed the amendments along with five other members, said legal and financial procedures would not end on part payment being secured.