For a period of up to 12 months
4 bounced checks deprive the customer of a check book
Banks operating in the country apply strict policy with dealers whose checks are returned, whether they are individuals or companies.
According to data collected by Emirates Today from banks in Abu Dhabi and Dubai, the customer, or the company to which four checks are returned within a year, is denied access to a check book for a period ranging between six months and 12 months.
The check is bounced
The check is bounced
Officials in the operations department in these banks said that Al-Etihad Credit Bureau is informed of the details of the bounced checks, at a time when the credit report shows the reason for the bounced check.
They explained that the most common reason for bounced checks is the insufficient balance or the closing of the account, pointing out that these two reasons affect the credit evaluation of the dealer, and reduce it to the lowest level, which also deprives him of obtaining any bank financing, until a clearance is brought from the authorities for whose benefit the check was returned.
The employees, who preferred not to publish their names, emphasized that the amendment of the credit rating affected due to the bounced checks takes time, so the dealers should be careful not to write any check without making sure that there is sufficient balance to pay it when it is due.
It is noteworthy that the Central Bank requested banks, at an earlier time, to verify the creditworthiness of their dealers in the Al-Etihad Credit Bureau database, before issuing check books.
The Central Bank also requested, in a circular issued to banks, that the check book for new dealers contain a maximum of 10 checks, indicating that additional check books can be issued after the lapse of six months, according to the approved procedures, provided that there are no returned checks (without payment).
According to a circular issued by the Central Bank at the time, banks must notify their dealers that the checks returned due to insufficient funds in the account will be registered with Al-Etihad Credit Bureau, which would negatively affect the creditworthiness of the customers.
The Central Bank encouraged banks to advise dealers to reduce their use of checks to a minimum, and to replace them by using other available means of payment, such as direct debit and bank transfers, whenever possible.
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