Check Reform: Key Changes Ahead
The reform of the regulatory framework for checks seems to be coming to an end, with significant changes on the horizon. Some of these changes will radically alter the way checks are used.
Depenalization of Checks without Provision
The first change is the depenalization of checks without provision of less than 5,000 dinars. This limit corresponds to the average check size, which stood at 5,052 dinars in the first quarter of 2024, but is lower than the average size of rejected checks during the same period, which was 8,145 dinars. In practice, this marks the end of easy sales in small businesses using checks. Many vendors set conditions for accepting checks, such as requiring the customer to be a account holder and solvent according to the latest bank statements, etc. But what's the point of these precautions if a 3,000-dinar check bounces? Absolutely nothing, and the poor merchant will be stuck in a cycle of amicable procedures.
The legislator is well aware of this and instead aims to push transactions towards a higher level of transparency. If you want to recover your money, you can simply opt for a salary assignment. This tracing mechanism will force the vendor to declare their income on the one hand and only source supplies from official circuit providers on the other. Cash payments cannot be the rule, as they are prohibited above 5,000 dinars and 3,000 dinars in certain cases.
Strengthening Bank Responsibility
The second change is the reinforcement of bank responsibility. Although the details are unclear, it is evident that the intention is to hold banks accountable for issuing checkbooks to clients with a history of bounced checks or failing to provide usual support to a client. We believe that credit institutions will be more cautious in issuing checkbooks. They will no longer have the upper hand in launching a judicial procedure, which will become the drawer's decision.
High-end check categories granted to premium clients will also make more sense, as today's cream of the crop may transform into a machine distributing future checks without provision with amounts below 5,000 dinars.
Introduction of Mediation
The third element is the introduction of mediation to resolve check-related disputes. This will give a boost to an emerging profession. It will take the place of notary bailiffs, who will see a lucrative business evaporate overnight.
We believe that the transition period will be difficult for the business community. It will allow for more banking operations, but will also push others towards more cash and clandestinity. All of this remains theoretical, and an evaluation of the real impact of this regulation will be necessary in a few years.