Finance Minister, Ersin Tatar, appeared on TV Tuesday night to highlight the growing problem of bouncing cheques.
Many citizens in the TRNC are unable to get bank loans, even with the easy credit systems currently in place. Instead they turn to loan sharks and expose themselves to high interest rate payments.
When the borrower receives a cheque from the loan shark, he has to make out a post-dated cheque in return, covering the principal and the interest, calculated in advance. If the cheque bounces, the loan shark can and does take him to court for non-payment. The borrower faces a one month jail term for each bounced cheque if found guilty.
Tatar estimates that there are some TL500 million worth of these high interest rate cheques in the market place. To combat this problem, a new draft law is being prepared to regulate these ‘credit’ companies. Tatar said that the cost to the state for one month’s imprisonment is TL3000; a seemingly disproportionate amount for failing to meet an average debt of TL2000 to TL3000.
He cited an example of a citizen who had bounced 55 cheques and would then have to serve 55 months in prison. This would cost the state some TL200,000 and prevent the citizen from making any contribution to the economy.