What is Partial Payment on a Cheque

Though digitalization is changing the working of the banking system, cheques are still considered the popular payment instruments. The usage of cheques is simple when used rightly. One of the concerning issues with the usage of a cheque is a bounced cheque. Previously, the law of a bounced cheque in the UAE states that anyone who issues a cheque that gets dishonoured will be facing criminal charges. But from January 2022, a new law has come into an act that the bounced cheque account holder will not be facing criminal charges but there will be fines levied. Criminal charges will be levied depending upon the aspects like forgery, stop payment instruction, withdrawing funds right before the encashment of the cheque, etc.  

In the new Federal Law No. (14) of 2020 Amending Certain Provisions of the Federal Law No. (18) of 1993 Concerning the Commercial Transaction Law regarding the cheques includes a new clause for partial payments of the cheque. 

Partial payment of cheques in the UAE 

Earlier, when there are insufficient funds in the account, the cheque will be bounced and the account holder will be booked for bounced cheque offence. With the new law, if there are no sufficient funds in the account, the person to whom the cheque is addressed can withdraw available funds from the account and have the cheque to themselves until the entire amount on the cheque is paid off. The minimum amount that is eligible for the partial payment of cheques in the UAE is 5%. 

When the cheque returns due to insufficient funds, you can visit the bank branch and request partial payment. This new rule is applicable to all the individuals and businesses in the UAE. This gives the cheque issuer some time to credit the account with sufficient funds.  

It is important to note that the cheque is valid for only 180 days to encash it. Be it the partial amount or full amount, the person to whom the cheque is addressed must encash it within 6 months else it becomes invalid. 

The cheque issuer will be charged AED 5 per each partial payment of cheques in the UAE. There are no charges levied on the receiver. 

Check about: Cancelling a Cheque in the UAE

Steps to encash the cheque for partial payments in the UAE

  • First, the cheque beneficiary can visit the bank to encash the cheque
  • If the cheque returns back due to insufficient funds, then the cheque holder can take the original cheque, a memo about insufficient funds, and an Emirates ID, Trade Licence (if the beneficiary is a company) 
  • Visit the bank branch of the cheque and request the partial payment. For example, if the cheque issued is from bank ABC then you need to visit ABC bank.  
  • Once the partial payment is made as per the instructions on the cheque, the beneficiary will get back the original cheque along with the partial payment certificate which has the total payment, remaining payment, and the payment made details 
  • After one installment of partial payment, the beneficiary needs to visit the bank again and follow the same steps for another set of payments. 

Frequently Asked Questions

Q. Will the cheque issuer be informed about partial payments made from the account?

A. Yes. The account holder will get a message on the registered mobile number regarding the partial payment of the cheque.

Q. What happens to the bounced cheque case filed before the new law has come into action?

A. The bounced cheque cases filed in the UAE before the new law was put into action can be decriminalized depending on the issue. The cheque issuer needs to visit the police station and get things clarified to decriminalize the charges.

Q. What if the cheque becomes invalid before the payment is done?

A. If the cheque becomes invalid or expires before the payment is fully paid, then the beneficiary needs to get a new cheque from the issuer.

Q. Is the partial payment of cheque available at all the banks in the UAE?

A. Yes. All the banks registered under the Central Bank of UAE will follow the new law. This is already practiced by all the banks in the UAE like Mashreq, HSBC, Emirates NBD, etc.

Meet the author
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Nikitha is a Senior Analyst at MyMoneySouq.com. She has been writing about personal finance, credit cards, mortgage, and other personal finance products in the UAE. Her work on Mortgage loans has been featured by the GulfNews and other popular Financial Blogs in the UAE.

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