Dubai: Abdul Aziz Al Ghurair, who is also the Chairman of Emirates Bankers’ Association, said, the banks will have to follow the new Central Bank directives on bounced cheques offenses by the UAE nationals.
Cheques are used as a collateral for certain types of loans in the UAE. Cheque bouncing is a criminal offence and has become one of the main reasons for imprisonment of people following the financial crisis of 2008.
“Decriminalisation of bounced cheques came in a short notice and we have to live with that. You have to accept that,” Al Ghurair told reporters on the sidelines of the DIFC Forum.
Bounced cheques that used to be a strong enough criminal offence to put people behind bars, have recently been relaxed for the UAE nationals. Al Ghurair said, banks could still pursue them, but as a civil case only.
The global financial crisis of 2008 forced many companies to close shutters due to cash flow problems and many of them ran into debts resulting in job losses and forcing many to leave the country.
The UAE Central Bank last year rolled out a set of rules aimed at limiting loans to individuals and capping banking fees in the country. The central bank has limited personal loans to 20 times the salary or the monthly income of a borrower with a repayment period set at 48 months.
Accordiing to the UAE Central Bank data, more than 1.5m cheques issued for payments totaling Dh55.3 billion ($15.05 billion) bounced last year.