Saudi Arabia has seen a 73 percent drop in the number of bounced checks since 2009, following the start of a government campaign aimed at consumers and businesses.
The decline in the total value of bounced checks was even greater, falling to SR3.8 billion in 2012 from SR15bn in 2009, marking a decrease of 74.6 percent, according to a report by the Saudi Credit Bureau (SIMAH).
SIMAH also provided figures on how many personal and commercial checks bounced. From 2009 to 2012, the total number of personal bounced checks decreased by 63 percent. The total number of commercial bounced checks decreased by 67 percent within the same time frame.
The total value of personal checks that bounced decreased by 75 percent from 2009 to 2012. The value of commercial bounced checks during the same period decreased by 72 percent.
The report provided 35 reasons behind the phenomenon of bounced checks in Saudi Arabia. It found that 63 percent of bounced checks in Saudi Arabia were due to insufficient funds, the main reason cited.
Since March 2010, the Saudi government passed tough legislation on bouncing checks to reaffirm the importance of checks as methods of settling debts and payments, according to another SIMAH report titled ‘Checks in GCC Countries’.
The report states that, under Saudi law, the punishment for bounced checks can be a fine ranging between a SR100 to SR2000, or jail time ranging from fifteen days to six months, or both.
Another drive to target the issue initiated by SIMAH included a campaign aimed at limiting problems by including bounced checks into the credit reports of companies.