Business | Banking
As cases increase, options to relieve courts considered
Government is reviewing proposal for centre dedicated to probing bounced cheques.
- By Zaher Bitar, Staff Reporter
- Published: 23:02 July 12, 2009
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The cost of bounced cheques
The cost of bounced cheques
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Imprisonment makes the situation worse
Imprisonment makes the situation worse
Dubai: Personal insolvency and companies' bankruptcy have become major issues since last September when the impact of the global recession became evident in the UAE.
Colonel Khalil Ebrahim Al Mansouri of Dubai Police told Gulf News: "We are very strict against bounced cheque cases, but before taking any legal action, we give the cheque issuers a chance to reach a compromise with the second party before filing a formal case. If the settlement can't be reached the complaint will be registered as a case and transferred to public prosecution and later to court."
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Al Mansouri pointed out that high profile individuals and those running big businesses are not sent to jail immediately even if they are caught up in bounced cheque cases involving big amounts.
"What we usually do is set them free after they sign an undertaking leaving their passport [until] they can pay back their debt. However, people who fail to settle their financial commitments will be sent to jail to protect the rights of the affected parties," he said.
With the number of cases of bounced cheques increasing, Minister of Justice Dr Hadef Bin Jua'an Al Daheri earlier told Gulf News that the UAE government is reviewing a proposal to deal with them out of court.
Al Daheri said: "The government is currently reviewing a proposal to set up a centre to handle bounced cheque cases before referring them to court."
Such a centre, he said, will reduce the burden on the courts by minimising the cases referred to them. In the first three months of 2009, police recorded a total of 11,440 bounced cheques, against 6,462 in the same period in 2008.
As part of their ongoing efforts to combat the issuing of cheques that are likely to bounce, the Dubai police have signed a data-sharing agreement with Emcredit, an entity that is developing a credit database of people and companies.
The database will help financial institutions to assess the credit risk of an individual or a company.
Lenders can check an applicant's credit history to see if they have bad records, and also detect if they have defaulted cheques and if there is an available balance for any cheque.
The verification process can be done in seconds, but not all banks are Emcredit subscribers. The police are currently providing Emcredit with the names of people who have been involved in bounced cheque cases.
Dubai Police are also planning to establish electronic links with bank settlement sections in Dubai to help them track data about bounced cheques fast.
The links will also facilitate complaint-filing against the cheque issuer without the complainant having to go to a police station. An electronic form with all data required about the bounced cheque is filled in and then automatically sent to one of Dubai's police stations to be recorded as an official complaint. The applicants are not obliged to go to police except to sign the formal complaint before it is sent to the prosecution.
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