UAE | General

UAE banks violating blank cheque regulations

Credit card, loan applicants being forced to give cheques as security

  • By Jay B. Hilotin, Chief Reporter
  • Published: 00:00 June 28, 2012
  • XPRESS

  • Image Credit: XPRESS
  • Beware: Don’t give blank security cheques to banks for personal loan or credit card approvals

Dubai: Some UAE banks are flagrantly violating rules that prohibit them from taking blank cheques from customers who apply for personal loans or credit cards, XPRESS has learnt.

The UAE Central Bank last year issued wide-ranging regulations aimed at curbing loose lending practices and bank charges.

Specifically, Article 15, Section B of UAE Central Bank regulations No.29/2011, states that: “Banks and finance companies are prohibited from taking blank cheques for granting loans or overdraft facilities, or for issuing credit cards.”

The regulations took effect in May 2011.  Of the 10 banks asked by XPRESS earlier this week, specifically on the question of whether or not blank security cheques are required to get a personal loan or a credit card, only one bank said they will “give it a pass”.

Bad practice

Another bank asked for the “context” of the story, without giving a reply. The rest declined to give a statement. XPRESS, however, learnt that several banks still demand blank security cheques from clueless customers.

One loan agent told XPRESS: “We do ask our clients to give us a signed blank cheque as part of the personal loan application process. Ten out of 10 customers applying for a loan give bank cheques only.”

It’s not clear what penalties would be slapped on offending banks. No comments were available from the UAE Central Bank, but it does have an online site where suggestions and complaints can be lodged:  http://www.centralbank.ae/en/index.php

Another loan agent for an international bank told XPRESS: “Our customers trust us and know that only the approved loan amount will be written on the cheque. It’s no big deal.”
A lawyer, however, said it’s a big deal when a security cheque bounces. Amer Syed Al Marzouqi, a Dubai-based criminal lawyer, said while banks asking for blank cheques from customers may be breaking the law, this is hard to prove.

“The most that offending banks would get is a fine and/or a warning,” said Al Marzouqi. “Suing a bank for violating this regulation would be the last thing a borrower would do when he’s already facing financial difficulty.”

“When a borrower gives a blank cheque, the lender can write the outstanding amount when the borrower fails to meet his obligations for whatever reason — it then becomes a bounced-cheque case. A lot of people are in jail for this reason alone,” the lawyer said.

“Even if a blank cheque was issued in violation of the Central Bank rules, this will not eliminate or diminish the criminal liability once a cheque bounces and is presented to a judge,” he said. “So never sign and give away a blank cheque. It’s big trouble.”

Comments (22)

Share your views
  1. Added 15:45 June 28, 2012

    All the banks I know of in Dubai take cheques for loans and credit cards.

    Mandar, Dubai, United Arab Emirates

  2. Added 15:37 June 28, 2012

    I have taken a credit from a bank and after used some month I deposited all out standing and cancelled the credit card but the bank refused to give me back my blank cheque asking it is bank file record and can't be refundable

    saleem, duabai, Pakistan

  3. Added 15:30 June 28, 2012

    Bad idea...these banks r ruining up our lives...first they run behind us to get a loan or credit card n den once d payment is missed..dats itt they show their real colors..misbehaving...bad language..abusive..dey become lik ghosts dt so many people are facing them everyday and those who cant face theses ghosts dey go n suicide..So I request CENTRAL BANK to suggest d banks collection department to keep peace.. be not harsh on the phones with the customers who are not able to pay their loans or credit cards..atleast no abusive language or threats..!!! v have ears to hear dem but still they bark like dogs..

    Fatima, Abu Dhabi, United Arab Emirates

  4. Added 14:54 June 28, 2012

    my friend and I, are also victim of a bank here. The sales man told us that blank cheque will be filled after the time of approval by Credit department with the approved limit, and they will call you and confirm on verified line. but after getting credit card when i called to the bank, they told me that its their policy to take blank cheques and they can't even return my cheque. i have made several complaint about by blank cheque and mis-selling by salesman but nothing happens.

    Anil, Dubai, United Arab Emirates

  5. Added 14:37 June 28, 2012

    This is good information

    Guerrero, Abu Dhabi, United Arab Emirates

  6. Added 12:30 June 28, 2012

    If this is a violation then why are the banks insisting to this method. I have just taken a Credit Card and the bank would not process my application if I did not provide them with a blank cheque. I opted to provide a cheque for the card valued amount but this was not accepted.

    Stephen, Dubai, India

  7. Added 12:20 June 28, 2012

    This place is safe and peaceful because of the strict lovely rules.But people should also cooperate with the rules and dont trust others in any transaction.As it is said precaution is better than cure.Take care as there are also some property agents who are money greedy and they trap and force the clients.They ask for a cheque of 100,000 just to show a villa to you and force you to give the cheque without seeing the villa scaring the customers that if you dont give the cheque then the villa will go out of your hands.People should come forward and let the society know about such fraud people and also let the law know about such people in order to get them punished.Make your place a more better place to live in.

    Mrs Khan, Abu Dhabi, United Arab Emirates

  8. Added 12:05 June 28, 2012

    I recently got a credit card and I was asked to sign on a blank cheque. Upon questioning the sales man, he said it is the regulation and that without that the application will not be processed. Little did I realize that the bank was committing a crime, by flouting the Central Bank regulations. I do not know whom t contact to discuss this matter.

    Abhinand Raghavan, Dubai, United Arab Emirates

  9. Added 11:18 June 28, 2012

    I am surprised in UAE the banks does this. In India we dont have this practise from any bank.

    menon, delhi, India

  10. Added 10:55 June 28, 2012

    So basically banks are cheating people into doing this and those who default end up going to jail for it which affects not just them but their families. Not that I support people defaulting for whatever reasons but going to Jail for this is absurd. What happens to all who signed them already? Can we go to the bank and say, hey, this is illegal, please pass it back? How about this rule is made effect and blank checks are requested to be returned or destroyed.

    S, Dubai, United Arab Emirates

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