While opening an account, banks in UAE provide free cheque book for the account holders. So far in 2018, 12 million cheques were circulated all over UAE. Cheques are used for most of the payments. Handling a cheque book is simple if you follow the terms and conditions on it.
Check: What you need to know about Bounced cheque in UAE & Dubai
Validity of cheque in UAE
Amongst the terms and conditions on handling a cheque, honouring a valid cheque is important. It is essential to honour the cheque during the validity. In UAE, a cheque is valid for 6 months from the date of issuance.
Banks reject the cheques issued after the validity. If a bank rejects a cheque that has expired, the drawer can request the issuer for a new cheque. If the issuer doesn’t provide a new cheque the beneficiary can file a cheque bounce case.
The law for cheque bounces is different in UAE and Dubai. In Dubai, if the issuer is found guilty for a bounced cheque, he will be levied fine that would be around AED 2000 – AED 10,000. Whereas in other parts of UAE, the charges for cheque bouncing is detention in addition to the fine amount which is 10% of the cheque amount according to Federal Law No. 18 of 1993. A travel ban will be imposed on the defaulter until the case is dismissed.
Validity of a bounced cheque in UAE: A beneficiary can file a bounced cheque case against the issuer up to 2 years from the date of issuance according to the new Federal Law No. 18 of 1993.
Apart from the validity, there are specific details that need to be overlooked while holding a cheque book
- Make sure the beneficiary name is written rightly
- Don’t overwrite the details on the cheque
- Give the amount on the cheque correctly in numerals and words
- Don’t sign on the cheque before filling details
- Don’t leave empty cheques signed in prior
- Make sure you signed on the cheque properly as banks verify your records, in the case of a signature mismatch the cheque will be dishonoured
Disclaimer: MyMoneySouq works hard to keep the figures and information up to date. However, it is recommended to get confirmation from a bank or authorized officials.
About the author
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.