New amendments on cheque provisions in UAE
The Central Bank of the United Arab Emirates has stated that the new amendments on cheque provisions shall take effect from 2nd January 2022. Effective 3rd January 2022 any cheque presented for payment and returned due to insufficient funds, the bearer of the cheque can directly approach the issuing bank and request to partially pay the value of the cheque up to the available funds.
The Issuing Bank will issue the manager’s cheque in favor of the beneficiary upon each successful partial payment and will make a note at the back of the original cheque confirming the partial payment concluded and will return the original cheque to the bearer along with a Cheque balance certificate. The original cheque will be retained by the paying bank once the full amount i.e. equal to the cheque amount has been paid.
The bearer of the cheque has the right to claim the remaining amount against the original cheque until the full value of the cheque is paid or the cheque becomes stale i.e. within 180 days from the date of the cheque. Even after receiving partial payment, the beneficiary does not lose the right of legal recourse against the issuer of the cheque in case of non-payment of the full cheque amount.
Please note that a fee of AED 5/- + VAT will be charged to the issuer of the cheque for each successful partial payment processed.
These amendments were introduced to achieve the following goals:
a. Reduce the negative practical aspects of dealing with cheques, in light of the best and most successful international practices.
b. Consolidate the principles of justice, fairness, and equal opportunities, by balancing the interests of the beneficiary (in fulfilling their rights in the fastest way possible) and the interests of the drawer (in terminating the criminal case against them upon payment).
c. Maintain a solid national economy and a judiciary system based on efficiency and quality; and boost the rule-of-law and international competitiveness indicators, in line with the state’s general vision and strategy.