business / banking

UAE banks to limit number of cheque leaves to 10 for customers

AECB report mandatory for account opening and cheque books

A teller at a bank in Dubai. New bank customers in the UAE will no longer be eligible for large cheque books exceeding 10 cheque leaves.
Image Credit: Gulf News Archives

Dubai: New bank customers in the UAE will no longer be eligible for large cheque books exceeding 10 cheque leaves.

In compliance with the Central Bank of UAE, UAE banks are implementing the guidelines on issuance of cheque book to customers.

In addition to limiting the size of the cheque books, banks are also doing mandatory background check on customers through Al Etihad Credit Bureau (AECB), making it difficult for customers with poor credit record to open accounts and obtain cheque books.

Under the new guidelines, individual customers will be issued cheque books with only 10 cheque leaves instead of the earlier practice of 25 cheque leaves.

Credit report

The new rules will be applicable to all new individual on-boarding of customers and AECB report is mandatory for all customers seeking cheque book facility. In the case of unsatisfactory AECB report, most banks will still issue cheque books for customer with a record of 1 to 3 cheque returns in the past 12 months.

While existing individual customers with clean credit bureau record, banks are free to issue jumbo cheque books up to 50 cheque leaves.

Bankers said existing non-individual customers such as company accounts will continue to receive large cheque books depending on their credit record.

Guidelines for account opening

Going forward account opening will be linked to AECB reports. Although new to country customers with no credit record in the UAE will be offered accounts with limited cheque leaves, customers who already have a credit record with the AECB will be evaluated on their credit record for offering banking services.

“Now on, new account opening will be subject to the credit bureau record of individual customers. Customer’s eligibility to get cheque books also will depend on their past record of accounts held with other banks. As a thumb rule, if there are more than three cheque returns (bounces) in the past 12 months, new account will not be opened,” said a senior officer in the retail banking department of a local bank.

According to banking industry sources, the Central Bank of UAE has mandated banks to constantly monitor new accounts for cheque returns. In the first six months from the account opening, if a customer’s cheque bounces for lack of funds, banks are required withdraw cheque facility to the customer.

The central bank had issued the guidelines in late 2018 on cheque book facility to customers in the context misuse of post-dated cheques, rising cheque bounce cases and loan delinquencies in the past.