Fast-track ‘Returned cheque’ cases: BAB

Manama : Bankers in Bahrain yesterday shed light on the need to fast track court proceedings in cases related to ‘Returned Cheques’.  

According to the participants in a forum organised by the Bahrain Association of Banks (BAB), the court proceedings in cheque cases now take three to four months of correspondence between the bank, the police station and the Public Prosecution to reach a settlement.

This was based on the conclusion that 80 per cent of non-performing loans are ‘Returned Cheques’ resulting from the failure of the clients to pay back.

Head of the Collection and Remedial Management Department at the Ithmaar Bank, Saeed Badr, said that the bank grants loans to individuals against the salary, as a basic guarantee, and takes a number cheques that are equal to the number of instalments, as additional collateral. 

“Nevertheless, the debtor may stop the payment for one reason or another, and this enters the bank into a long spiral of procedures,” he added.

Explaining further, Badr also pointed out that the competition among retail banks is adding to the issue, as this prevents the banks from adhering to strict rules or demanding proper collateral guarantees while granting loans. This, however, is not the case with corporate loans, he affirmed. 

‘New specialised system required’

The banking system in Bahrain should be supported with a specialised prosecution system, which would further enhance the sector’s competitiveness, viewed a top legal expert. 

Bahrain could follow the examples set in this regard by many countries around the globe, said Ahmed Hassan, who is a legal expert in banking affairs. 

According to Hassan, writing cheques without sufficient funds or a returned cheque is a crime that is punishable under the Criminal Code. 

The time required for the bank to recover its rights from the cheque holder does not exceed 24 hours –the debtor has either to pay or go to jail, he added. 

Hassan, however, pointed out that the basic problem here is the slow pace of procedures, though Bahrain boasts a judicial system with advanced procedures. 

“This could be rectified with the creation of a prosecution system for banks, which would also consolidate the investment attractiveness of the banking sector in general,” Ahmed Hassan said.