A total of 12.06 million cheques worth Dh592 billion were handled by the UAE Clearing Cheque System during the first five months of 2018, according to Central Bank of the UAE data reported by the state media agency Wam.
The total number of bounced cheques in the same period came to 515,000 with an approximate value of Dh26.2bn. This represented 4.3 per cent of the total value of the cleared cheques at the end of May.
Comparing the first five months of 2018 with the same period last year, 12.9 million cheques worth Dh643.7bn were processed during the first five months of 2017, according to Central Bank data. Of those Dh28.9bn worth of 546,000 cheques bounced, accounting for 4.5 per cent of the cheques' total value and 4.2 per cent of the total number of cheques handled by the system.
This means 31,000 fewer cheques bounced in the first five months of this year, compared to the same period last year, and the total value of dishonoured cheques fell by Dh2.7bn.
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A similar trend happened in 2017 when, as per the statistics, the total number of bounced cheques fell by 7.3 per cent or Dh2.3bn, against the same period in 2016.
In November last year, Dubai Courts announced it would issue fines instead of jail sentences for bounced cheques with a value of Dh200,000 or below.
Under the criminal order issued by the Dubai Attorney General Essam Al Humaidan that came into effect in December, those responsible for bounced cheques of up to Dh50,000 are now fined Dh2,000, while those who bounce cheques of between Dh50,000 and Dh100,000 must pay a Dh5,000 fine, with a Dh10,000 fine for cheques between Dh100,000 and Dh200,000. The move was designed to reduce the burden on the courts and ensure non-fraudulent cases where residents had run-up heavy debts could be handled more leniently.
In the rest of the UAE, however, bouncing a cheque is still a misdemeanour under UAE law that is punishable either by jail or a fine, depending on the nature of the case and the amount.
Diana Hamade, a lawyer and the founder of International Advocate Legal Services, said the difference in the number of bounced cheques between 2018 and 2017 “is not significant”.
However, she said there is now a “trend to have cheques in an amount above Dh200,000”, with many trying to move away from using cheques.“I believe that people now are not accepting cheques in any amount less than the Dh200,000 to keep the criminal action applicable,” she said.
Keren Bobker, a financial adviser for Holborn Assets and a consumer columnist for The National, said she would expect the actual number of bounced cheques to fall as more individuals and companies switch to electronic payment systems.
"Although the decrease was just 0.2 per cent of the total value, I think the reduced number of cheques bouncing is as significant. If it was just a decrease in value we could probably attribute that to the reduction in rental prices, but this appears to be something more," she said. "I hope people are planning a little better and being aware of the importance of not writing bad cheques, even though the legal consequences are less serious for many people."
The value of the cheques that circulated from January to the end of May in 2018, represented about 39.3 per cent of the total value of the cheques circulated in 2017, which reached Dh1.5 trillion.