Parliament to consider new law allowing partial check payments

TDT | Manama

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The Financial and Economic Affairs Committee of the House of Representatives is currently reviewing a new law proposed by the government aimed at significantly reforming the existing regulations governing check transactions. The government’s memorandum to the parliament emphasises the need for these changes, citing the negative aspects revealed by the practical application of check transactions.

The proposed law aims to address these issues through various amendments and new provisions.

One of the key features of the new law is the introduction of partial check payment.

This provision mandates banks to fulfill partial payment of a check if the account balance is insufficient to cover the full amount, unless the holder explicitly refuses partial payment.

The law further stipulates that the holder can resubmit the partially paid check, and the drawer is obligated to mark the check with details of each partial payment. The original check must be returned to the holder along with a certificate confirming the partial payment.

Regulations

The proposed law also mandates the Central Bank of Bahrain (CBB) to issue regulations outlining the terms, conditions, and procedures for implementing partial check payment, including both cash payment and settlement through book entries, such as account crediting, bank transfers, clearing, or other methods determined by the bank.

Furthermore, the law states that the drawer’s credit record will be marked in cases where a check is returned due to insufficient funds or partial payment.

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

Transactions

This new law, if passed, could significantly impact the way check transactions are conducted in Bahrain, potentially leading to a more flexible and efficient system for both individuals and businesses.

It will also reduce the cases of the bounce-checks referred to the Public Prosecution.

According to official statistics released recently, checks returned due to financial reasons saw a slight decrease in number, from 3,215 in the first half of 2023 to 3,102 in the first half of 2024, but their value rose from BD7.8 million to BD9.0 million.