13 FEBRUARY 2002
By Kurt Sansone
In what is visibly a symptom of the liquidity problem facing the country, Gasan motors has informed its customers that the company will levy a charge of Lm5.00 if client cheques are not honoured by the banks.
Customers, who hold higher purchase accounts with Gasan, received the curt notice with their January payment receipts.
A number of customers who enquired about the notice were informed by the accounts department that the measure was a result of a growing number of cheques that could not be honoured by the banks.
The note read: "This is to kindly inform you that with immediate effect a charge of five liri (Lm5.00) will be levied and charged to your account in the event that for any reason whatsoever your cheque is not honoured by your Bankers."
The business community is being widely faced with the problem of bounced cheques and late payments owing to the tight cash flow situation. In some instances it has been recorded that businesses are asking for post-dated cheques in advance to make sure that they get paid.
Stricter banking practices, especially since HSBCs entry into the market, have compounded the cash flow crisis with businesses having their overdraft facilities curtailed, and banks coming down heavily on clients defaulting their loan repayments.
Speaking to The Malta Financial and Business Times on 23 January, Chamber of Commerce President Reginald Fava expressed his concern at the inflexibility shown by the banks.
Mr Fava had told this newspaper that although he agreed that banks must safeguard their interests, "they should not undermine the position of the entrepreneur."
Mr Fava had advised banks to be more far-sighted in their relationship with clients by allowing a certain degree of flexibility, which would be necessary to neutralise certain exceptional circumstances.