The Financial and Economic Affairs Committee of the House of Representatives is currently reviewing a new law proposed by the government aimed at reforming the existing regulations governing check transactions in Bahrain. The government’s memorandum highlights the need for changes due to negative aspects revealed in the practical application of check transactions. The proposed law includes various amendments and new provisions to address these issues, with a key feature being the introduction of partial check payment.
Under the new law, banks will be required to make partial payments on a check if the account balance is insufficient to cover the full amount, unless the holder explicitly refuses partial payment. The holder can then resubmit the partially paid check, with the drawer 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.
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 cash payment and settlement through book entries like account crediting, bank transfers, and clearing. Additionally, the law states that the drawer’s credit record will be marked if a check is returned due to insufficient funds or partial payment, with regulations defining the criteria and procedures for such marking.
If passed, this new law could have a significant impact on how check transactions are conducted in Bahrain, potentially leading to a more flexible and efficient system for both individuals and businesses. It is expected to reduce the number of bounce-check cases referred to the Public Prosecution. Official statistics show a slight decrease in the number of checks returned due to financial reasons, from 3,215 in the first half of 2023 to 3,102 in the first half of 2024, although their value increased from BD7.8 million to BD9.0 million.
