Law Updates

CBO Issues New Returned Direct Debit and Cheques Regulation

The Central Bank of Oman (CBO) published in this week’s issue of the Official Gazette a new Regulation of the Returned Direct Debit and Cheques System that replaces the Regulation of the Returned Cheques System of 2007.

The new Regulation of the Returned Direct Debit and Cheques is extremely similar to the old Regulation of 2007, with the most major difference being the extension of the scope of the regulation to cover direct debit orders in addition to cheques.

Under article 4 of the regulation, banks are required to submit to CBO’s electronic system details on individuals and entities who make a direct debit order or cheques that are returned due to lack of funds twice or more in a single month, four times or more within a period of six months, or six times or more within a period of one year. Those captured by article 4 are then placed by CBO on a special consolidated list that can be used by banks, financial institutions, and credit agencies to evaluate their creditworthiness. Banks are also required to withdraw the chequebook, not open current accounts for them, and suspend direct debit orders for those captured by article 4 of the regulation for a period of 1 year, which may be reduced at CBO’s discretion.

CBO has the right to penalise banks found in violation of the provisions of this regulation by imposing a fine not exceeding 20,000 Rial Omani.

This new regulation enters into force tomorrow. You can read it in full in English on the link below: