Muscat - The Board of Governors of the Central Bank of Oman (CBO) that met on Monday has affirmed the preparedness of the CBO to implement the partial payment system for cheques in the banking sector and urged other authorities concerned to complete their readiness.
The Board also approved several regulatory requirements related to activating the Wage Protection System.
What is a partial cheque payment?
When a cheque is issued and the funds available for payment are less than the value of the cheque, the bank will partially honor the cheque where it will pay up to the amount available on the account.
If a cheque is returned due to insufficient funds, the bearer of the cheque can choose to accept partial payment. In this instance, the bearer must approach the drawee bank to proceed with partial payment of the cheque.
The cheque must be valid in all other respect
Payment will be made to the beneficiary of the cheque only
The drawee bank will pay the bearer the remaining amount up to the available funds of the account.
The drawee bank will then fix a special stamp to the front of the cheque, a stamp to the back of the cheque, and return the cheque to the bearer alongside a Partial Payment Certificate.
Bounced cheques
To mitigate the impact of the bounced cheque phenomenon on the different parties concerned in the transaction – drawer, drawee, and payee alike – the Central Bank says it is keenly studying the possible enablement of partial fulfillment of cheques for the first time in Oman.
The issue of bounced cheques – a serious legal offense in the Sultanate of Oman – has decreased because of the increasing popularity of digital payment systems for effecting transactions.
According to the Central Bank of Oman (CBO), around 362,000 cheques fell in the category of ‘bad’ or ‘dud’ cheques in 2023, primarily because of insufficient funds in the customer’s bank account. This compares with around 387,000 cheques that bounced in 2022, representing a 9.8 percent decline year-on-year.
“It’s important to note that a bounced cheque or having an unpaid cheque is considered a serious offense in Oman and may result in legal consequences, including fines and imprisonment,” the Central Bank cautioned in its 2024 Financial Stability Report.
Of the total number of bounced cheques recorded during 2023, 291,444 cheques – representing 80.5 percent of this figure – were dishonored by banks due to ‘insufficient funds’ in the issuer’s account. Further, in 8.73 percent of the cases (equivalent to 31,614 cheques), the account in question was either ‘Closed, Frozen, or Transferred’. ‘MICR Encoding Errors’ were to blame in a small number of other cases.
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