LIPOLISIS

1. Banks have a central database for Nonperforming Loans (NPL). If a similar publicly-accessible database is prepared for dishonoured cheques it will discourage individuals from issuing uncovered cheques and greatly improve trade in the country.

2. A central database for dishonoured cheques is a good idea. However

unfortunately many of our people are illiterate and will not be able to access the database using laptops or computers. It is quite possible in Europe and other advanced countries for traders to immediately access the database and cheque the position of bounced cheques issued by a person. Great fraud is going on here. People coming from the frontier or the NWFP live in Peshawar but give cheques from a bank in Rawalpindi. They trade using cheques. Fraud is going on. Every trader brings a chequebook with 50 or 100 cheques. Banks should not open an account for everybody. They should seek the position of the applicant.

297 Bank managers are told that if they can open 200 new accounts they will be promoted or be given a bonus. In their greed they take 10,000 or Rs15,000 from each applicant and open their accounts. It is not sufficient to simply open a new account. They should see the financial base of every applicant. Is this a default party, or is it a default party or is it committing a fraud? The traders give a Rs2 or Rs5 rupees worth of cheque and write two 510 or 20 lakh rupees on it. How will the amount be recovered? Our system has been totally destroyed ever since people have come to use cheques. Instead of using a central database only, I feel the lists off dishonoured cheques should be printed and sold in the marketplace exactly like lists of winning prize bonds are published by the State Bank of Pakistan. People can buy the lists for a small amount of money, take them home and can learn of the bonds that have won the prize. Similar lists of dishonoured cheques can be used by traders to determine whether the person giving the cheque is habitual. His NIC number, picture etc. should be published. This will bring awareness to the public. The bank account of such fraudsters should be closed. He is a defaulter but is also killing other people that he is trading with. The fraudsters have great power. Liars are listened to today. They can hire attorneys. No bank manager or bank wants to antagonize them. They are afraid of the fraudsters. There is no grip of law in the country. If the law has a grip such things will not happen. If such a law is made it will help not only the capitalist but even those who are poor. They will know that they cannot be cheated. Laws should be made to protect trade and they should be appreciated. 3. Publishing the details of bounced cheques on a publicly accessed database will

certainly help reduce the epidemic of dishonoured cheques. The general practice in our markets is to consider dishonoured cheques as zero. Small businessmen prefer to deal in cash. Sometimes traders give IOUs on a scrap of paper. This scrap has more value than a cheque. Traders accept cheques when they are sure they will be cashed. If the details of dishonoured cheques are published on the Internet or are otherwise very easily available even to small traders it will eliminate the scene of writing cheques casually.

4. Information regarding dishonoured cheques should be circulated to all the banks in the country. This way the banks will know which person is a habitual bad- cheque writer. The affected bank can give the offender a grace period to clear his cheques. This step will reduce or even end the practice of issuing bad cheques.

5. The system, whereby all banks can share the details of nonperforming loans between each other, already exists. This information is used by banks to evaluate a loan application. However some black sheep within the bank do manage to bypass this safety measure and help a defaulter to obtain a loan. I agree that there should be a central database about every person and about every dishonoured cheque. His cheque should not be accepted, small or large, till it is found that all his earlier cheques have been honored. If any of his earlier cheques had been dishonoured, then his cheque should not be accepted.

6. Particulars of account holders whose cheques have bounced, such as their National Identity Card (NIC) number should be included in an easily accessible database on the Internet. This database should also be available in hardcopy form on payment of a small fee just like lists of winning prize bonds numbers Traders can use this list to make an informed decision about whether or not to accept a cheque.

298 7. If details of a bad cheque, such as the NIC number of the writer, the date, the amount, and the name of the bank involved are made easily available to any business person, it will help a great deal in curbing the flood of bad cheques that is threatening to ruin our economy.

8. It will be a great idea to publish the complete details of bounced cheques and their writers online and in hard copy form. However this might not be really practicable. The reason is that banks in Pakistan are in a rush to open new accounts. They are more interested in the number of accounts rather than in the quality of the account holder. The government has made laws about bounced cheques harder but the matters are status quo.