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Dubai’s cheque law: Should it be changed?

Dubai’s cheque law: Should it be changed?

A new court opened this week to deal specifically with cheque crime. Once again it has prompted calls for Dubai’s stringent cheque law to be changed.

August 24, 2010 12:11 by



The debate is particularly timely; earlier this month the Central Bank released figures showing that the total number of bounced cheques in the UAE leapt by 8 percent in the first four months of this year. At the same time, the total value of the transactions involved dropped by 25 percent compared to 2009 – that means there are more defaulters on smaller amounts. According to Emirates 24-7, close to one in every 16 cheques is bad in the UAE. For how long can the Dubai criminal system cope with these increasing numbers of cases?

The result is an awful lot of people behind bars. Fair punishment, you might say, as they broke the law. But once imprisoned, what are the chances they will be able to repay their debt? It serves as a deterrent, yes, but it doesn’t serve anyone else. As we come to the (hopeful) end of the financial downturn, media is reporting on the large numbers of businessmen trapped in UAE prisons. Many have served their sentences, but are unable to repay their debts so remain in prison.

7Days reported in June that the non-profit group Detained in Dubai gets up to five people a day contacting them about debt woes in the emirate, with around 80 percent of the people they are currently helping battling bounced cheque or fraud charges. The organization told the paper of one case in which a company employee who was signing cheques on behalf of his business as per his job description was held personally responsible for the cash when they bounced, despite the cheques being from a corporate account. The management of the company disappeared.

The system’s glaring errors are also compounded by lenders themselves, who are a long way from perfect. Radha Stirling, Detained in Dubai’s founder,said, “We have dealt with people where a case has been filed and it’s obviously just a mistake. And as we see in every country around the world, banks do make mistakes.”

It seems those campaigning for a change to the law have a strong argument; a poor system compounded by mistakes is bad for everyone, including courts, lenders, and the accused.



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5 Comments

  1. zoher on August 25, 2010 8:14 am

    I do agree that imprisonment for cheque default serves no one. The major loophole in the system is poor employees traped while signing corporate cheques as part of their Job description.

     
  2. ali fakha on August 25, 2010 8:15 am

    if all of us check who is behind all these problems for boun ced cheques, it ie very simple the BANKS themselves. they give every one so much credit cards high limits, loans etc… without looking for any background . The salesman getting his commission no matter what is going to happens after few months .
    If all of us remember before few years how banks was chasing every one to give him card and loans and now when any of us need a loan to close such cards , no bank willing to give loans, so can any one tell me how this problem will finish?
    it will not finish as much as the banks not cooperating properly and not helping people now when they need the help. the other choice and this what many doing is leaving the country with all banks problems behind him.
    why, if you check the other issue is court putting the borrower in jail, so can any one tell me , how he will pay as any company will ofcourse fire this employee and then his family will be finished also as no income , so how he will pay back.
    what you think he or she will do in such situation other than leaving the country.
    such rules should be changed and government should force the banks to easy the repayment plan and stop threatening every one with more than 50 calls daily using different names and numbers and lawyers and so on.

     
  3. Abdullah Dakroub on August 25, 2010 10:00 am

    I totaly agree with the fining as along as it is proved that there are no bad intentions when issuing a cheque. Everything you have to pay for in the UAE now requires a cheque, and whenever you issue a cheque you are frightened to do so not knowing your fate. Knowing that jobs are never secure, because again by law your employer could terminate you in one month time.

    Looking at the persons who fled the country leaving their cars behind, and knowing many of those have fled because of their car loans.

    Finally, all banks charge a AED 200+ fine for bounced cheques. These fines should go to the central bank and not to the bank collecting this fine.

    I believe if the UAE has strict laws on employment/banking, alot of these issues will decrease. This is offocurse on personal issues and not criminal.

     
  4. Andrew on August 25, 2010 10:35 am

    Central Bank creates a credit rating agency and/or framework + banks use it = dumping checks and using a proper DD system.

    Issue solved, assuming the CB pulls its finger out.

     
  5. SJH on August 25, 2010 11:22 am

    Agreed, Banks do not co-operate either professionslly or personally, My case, requesting bank for settling my card and now for 18 months paying penalties, reason one bank policy differs from the other, Where are those guidlines set for BANKS…anyone ?

     

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