The UAE Central Bank have issued a new rule in regards to issuance of “Cheques”. The purpose of issuing a new rule is to enhance the current lending practices followed by the Bank.
The Central Bank requested the UAE Etihad Credit Bureau to carry out the credit check prior to the bank issuing the cheque books to their customers. This check will enable the bank to gain information on customers credit worthiness.
Furthermore, The Central Bank also instructed the UAE Banks, when new customer request for a cheque book, the bank should issue a cheque book with maximum of 10 individual cheques, and the bank may issue more cheques to their customers provided they have completed six months during which no cheques is bounced. The Circular of the Central Bank instruct the lenders to notify their customers if they issue a cheque and bounced for insufficient funds, their accounts will be reported to the Etihad Credit Bureau which will negatively impact on their credit worthiness and they shall be prepared to face the legal consequences due to their act.
Central Bank also advised the Banks to inform and encourage their customer to make use of electronic/online payment methods instead of issuing cheques to avoid any kind of inconvenience.
Another important notice from the central bank to all bank is to regularly update their internal records by requesting their customer to submit their identity details.
To the best of our knowledge if such rule as Published by Khaleej times business on December 10,2018 is applied by the UAE central Bank, than we of opinion that the central bank rule in regards to issuance of cheques and submission of customer identity details shall be strictly complied with by all resident in UAE to avoid any kind of suspension in Banking Services and in facing un-necessary legal action.