He added that due to the efforts of SIMAH, the Saudi Arabian Monetary Agency (SAMA) and the Ministry of Interior, the number of bad checks issued in the Kingdom has been reduced.
Giving statistics at a forum in Dammam last week, Al-Mubarak said 35,859 bad checks were issued in the first quarter of this year compared to 40,565 during the same period last year. He added that the value of bad checks had also slightly reduced from SR3.6 billion to SR3.4 billion.
Al-Mubarak said people who issue bad checks will be named and shamed in local newspapers and would see their credit ratings drop. He added that the rating will impact the issuer’s financial status and will be registered with all of SIMAH’s 85 members.
“We currently have all local and foreign banks in Saudi Arabia as members of SIMAH, as well as rent-a-car companies, mortgage and real estate firms, and telecom companies, which will all be advised of the customer’s risky financial status,” he said.
“Once provided with the information, it is up to the company to decide whether to provide the customer with services. We are not here to say who to provide services to. We are only here to provide information,” he added.
Asked if individual problems of not being able to afford increasing rents, food prices and other bills has a role to play in the large number of bounced checks, Al-Mubarak said the problem is not new.
“If you go back before 2007, you will find there was a large number of bounced checks, but things are improving with the 2009 campaign and cooperation with SAMA and the Ministry of Interior,” he said.
Al-Mubarak explained that there will be committees that will have 30 days to rule on people who stand accused of issuing bad checks. “The accused also have rights. The accused can go to their banks and fill out an objection memo, which contains 31 reasons stating why the check may have bounced,” he added.
At present, banks that wish to prosecute people who issue bad checks report the matter to the police. The Ministry of Interior is, however, expected to set up courts and formulate a system to punish people who issue bad checks.
Al-Mubarak said SIMAH’s campaign has so far lobbied SAMA to establish a law on the matter and informed local businessmen and banks. He added that the only problem that now remains is solving problems relating to the “culture of credit.”
“Unfortunately, we still see there are people who are not quite understanding why and when to use credit and the importance of maintaining sufficient funds in one’s account before writing checks. This is why we are offering workshops and have noticed many local banks placing ads on their ATM’s to educate their customers,” he said.
According to SIMAH, a bad check is issued when a person writes a check without adequate funds, withdraws the funds before the check is cashed or deposited, orders the bank not to process the check, or writes it in a manner that prevents the bank from processing it.
