Several amendments to the Commercial Transactions Law related to cheques will contribute to raising the UAE’s ranking in the Global Competitiveness Index, the Central Bank of the UAE (CBUAE) said on Monday.
These amendments, which will come into effect on 2 Jan. 2022, are related to the decriminalization of cheques, partial payment of the cheque, and tougher administrative penalties for issuing cheques without funds.
The CBUAE said the amendments are in line with the government’s key plans and strategic initiatives to build and support a sustainable national economy based on best international practices.
Khaled Mohamed Balama, Governor of CBUAE, said the amendments will assist in facilitating commercial and banking transactions, streamlining procedures for collecting the cheque’s value, and making the use of cheques more flexible.
The CBUAE Governor said the amendments will reduce the negative aspects revealed by the practical experience of dealing with cheques, compared to the best and most successful international practices.
The new amendments will also consolidate the principles of justice by striking a balance between the interests of the cheque beneficiary or bearer in fulfilling their rights as soon as possible, and the drawer’s interest in removing any criminal case filed for non-payment of the cheque, he added.
In a statement, the CBUAE said under these amendments, the scope for the criminalization of returned cheques due to insufficient funds has been narrowed and confined to cases of bad faith and other cheque crimes.
This will deliver the desired goals of replacing decriminalization with preventive measures, coupled with deterrent alternative penalties to reduce the misuse of cheques, the statement reads.
These amendments are also aimed at securing the rights of cheque bearers and beneficiaries, and will also expedite collection of the cheque value in a more effective manner (determined by the Central Bank), whilst also encouraging the public to use modern technological and digital means, instead of traditional paper cheques. According to these amendments, partial payment of the cheque has also become mandatory.
If the amount available for payment is less than the cheque value, the drawee bank must pay the amount partially, unless the bearer rejects partial payment.