News

Number of bounced cheques in the UAE revealed

bounced cheque UAE

A total of 12.9 million cheques worth AED 643.7 billion were handled by the UAE Clearing Cheque System in the first five months of 2017, and nearly AED 29 billion worth of those cheques were bounced.

That may sound like a lot, but the total value of bounced cheques was actually down compared to last year. Against the same period in 2016, the value of dishonoured cheques fell by 7.3%.

In most countries around the world, a bounced cheque is a civil offence – a private dispute between people or organisations. Civil offenders are usually subject to heavy fines. However, in the UAE, a bounced cheque is considered a criminal offence.

According to research and studies, people issue dishonoured cheques due to lack of knowledge as they are unaware of the legal consequences.

But Article 401 of the UAE Penal Code clearly mentions that a bounced cheque is a criminal offence. A person who issues a cheque with insufficient balance in their bank account can face detainment of one month to three years, or a fine of at least AED 1,000.

With that in mind, at the end of last year the UAE introduced a draft insolvency law; the aim is to help struggling SMEs the chance to restructure and pay their debts. However, this new law is only applicable to commercial firms, government-owned companies and individual traders. It will provide traders with three options when in financial crisis – restructuring, preventative composition and declaring bankruptcy.

These protections do not apply to private individuals, though. So if you are struggling with money, then it is important to think before your signature lands you in trouble.

Did you know that some insurance policies come with income protection that can help you avoid bounced cheques? Click the button below to compare quotes for your car, home, health or travels to see which policies suit you best!

I want income protection!
To Top