TRADERS selling products to customers on instalment payment plans without a proper licence, or at highly inflated prices could face up to a year in jail and fines of between BD1,000 and BD5,000, or both, under a new law aimed at regulating the practice.
The draft legislation, which will be debated during the Shura Council’s weekly session on Sunday, has been proposed by five members led by Dr Bassam Albinmohammed.
It has been backed by the Shura Council financial and economic affairs committee and follows claims that retailers have been charging inflated prices – by offering customers instalment payment options – using complex calculations.
Dr Albinmohammed said he appreciated the fact that it took longer to collect payments through instalments compared with cash upfront but that was no excuse to exploit customers.
Meanwhile, the Justice, Islamic Affairs and Endowments Ministry told the committee that court verdicts have been issued in 2,447 cases of debts resulting from unpaid instalment payments, and 6,516 cases are awaiting verdicts.
The Industry, Commerce and Tourism Ministry had welcomed the law, telling the committee that regulating the instalment payment practice was vital to trade in the country.
“The Shura Council has to differentiate between payments by instalments for promotional purposes and that involving a third party such as banks and financial institutions,” said Minister Zayed Alzayani.
“Organising the instalment process is important since it is widely used but putting a financial burden on merchants by obliging them to register through fees will not help the flow of business in the market.”
However, the Central Bank of Bahrain (CBB) has told the committee that the law would disrupt business.
“Restricting sales through instalments would have a negative effect on businesses, while leading to unnecessary disturbances.
“Most of purchases nowadays involve payment through instalments, on terms agreed on by both the retailer and customer.
“Should the CBB start regulating the practice, then small businesses will find it difficult to reach the level of banks and commercial establishments due to our strict monitoring rules and regulations for the sectors we oversee.
“The law has to be flexible, without putting any financial and administrative burden on businesses.”
Committee chairman Khalid Al Maskati said that terms of instalment payment options were agreed between sellers and buyers, but without sufficient details being provided.
“The agreements don’t state the actual price and the interest rate being used to calculate the instalments.
“Court verdicts are issued on the total bill as mentioned in the contract even if the product sold is much lower in market value should the consumer face difficulty in making the payment at any stage.
“People’s needs are being taken advantage of through highly inflated prices and that’s why the law is vital in balancing the process and ensuring deals are reached on reasonable terms.”
If approved on Sunday, the law will be drafted as a proper legislation by the Cabinet and referred to Parliament and the Shura Council for review.
The law does not apply to real estate deals.
Meanwhile, members of the upper chamber of the National Assembly will continue to debate amendments to the 1976 Social Insurance Law that would see family members being registered as company employees under the Social Insurance Organisation.
They will also take a second vote on an amendment to the 2006 People with Disability Care, Rehabilitation and Employment Law that would expand the current first-degree caretakers of people with disabilities to the third degree and accordingly give them two hours off daily.
The Cabinet has asked MPs who have now approved the law twice to rethink the amendment, saying that it would harm employment of people with disabilities or their family members in the private sector.
The Shura Council rejected the move last year, backing the government’s sentiments.
The session will also debate the 2019 closing financial statement of the Future Generations Fund.
mohammed@gdn.com.bh
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