UAE bank gives benefit of the doubt on missed payments

It’s not in every bank’s interest to flag up every customer that misses a payment. Ideally, it will try and rectify the problem internally before contacting official authorities, but that would be the last course of action.

I switched my salary to a new bank about a year ago. However, I kept my account at the old bank open as there were cheques going out of the account to pay off a car loan. My wife deposits a fixed sum into the account through a standing order to cover the car-loan cheques. However, I accidentally discovered that the past three cheques had bounced because my wife's standing order had stopped without her realising. When I contacted the bank that issued the loan they did not seem very worried about the bounced cheques and stressed that the outstanding debt would not affect my credit rating or prevent me from travelling. They asked me to pay the outstanding balance whenever I had time. The understanding in the UAE has always been that bouncing a cheque is a serious issue, so has the law relaxed? PS Dubai

The expert advice

Jamal Alvi, head of business, head of assets, retail banking at ADIB

Your bank has confirmed that the bounced cheques will not cause you any problems with regards to your credit rating or prevent you from travelling, as long as you can pay the equivalent amount of the unpaid cheques as soon as possible. However, “cheque-bouncing” is still a criminal offence in the UAE, and anyone who engages in this activity can be prosecuted under UAE law. A prosecution will only be brought to the offender if the aggrieved party files a legal complaint. Therefore, in this instance as long as you settle the amount with the bank, it does not seem likely it would continue with any form of prosecution.

The reader’s advice

Steven Fernandes, Abu Dhabi

Sometimes a bank will give you the benefit of the doubt. If you have been a customer for a while and have always made your payments on time, then why wouldn’t they assume that something had gone wrong that was beyond your control? The way I see it, it’s not in every bank’s interest to flag up every customer that misses a payment. Ideally, it will try to rectify the problem internally before contacting official authorities, but that would be the last course of action. The fact that you contacted the bank yourself further proves to its credit department that you will settle the missed payments and any future payments will be paid on time. If, however, the problem had persisted for six months then I’m sure they would have stepped up their efforts to contact you and resolve the issue. But I think your case highlights the hysteria that sometimes surrounds the issue of cheque-bouncing in the UAE. Yes, you can end up in jail if you bounce a cheque but that doesn’t necessarily mean you will if your bank acts sympathetically. And don’t forget that in October 2012, the Central Bank decriminalised bounced cheques for Emirati borrowers. However this ruling (which later extended to expatriates too) did not relate to all cheques — only those acting as security cheques drawn against personal finance products such as credit cards and loans. There were rumours the Central Bank might decriminalise all bounced cheques for all residents, but that hasn’t happened yet. However, the changes so far indicate some level of leniency and while cheque-bouncing is still a criminal offence, this leniency could be another reason your bank went easy on you. Effectively the bank gave you a grace period to solve the problem and the decision worked.

The next money clinic

I want to invest Dh500,000 of my hard-earned money but have no clue how and where to invest. Could you suggest a safe and sound way to generate some regular income by investing it according to the Sharia/Islamic way. QM, Abu Dhabi

Every three weeks The National features a reader's personal finance problem. If you have an issue or would like to suggest a solution for another's reader's concern, write to [e-mail]

The advice provided in our columns does not constitute legal advice and is provided for information only. Readers are encouraged to seek appropriate independent legal advice

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