Are UAE banks still bouncing cheques in full?

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Are UAE banks still bouncing cheques in full? 1

Cheque Bounce in UAE and in full, is still being practiced by local banks, rather than releasing whatever funds are in the cheque issuers’ accounts at the time, despite changes to the UAE law that allow for such releases.

This practice has created problems for business owners and landlords who rely on cheque payments to receive funds owed to them.

In 2022, The UAE passed legislation to de-criminalize bounced cheques, which has rewritten the landscape for businesses and individuals alike. In provision with law, banks are required to make payments on cheques up to the available funds in the relevant account, unless the beneficiary objects.

However, despite this change, most banks in the UAE still prefer to bounce cheques in full, causing issues for many individuals and businesses.


Banks in the UAE have been reluctant to release whatever funds are in the account on submission of cheques, despite the legal changes that allow for this. This reluctance has resulted in problems for everyone from business owners to landlords expecting payments from their tenants.

For landlords who issue annual leases on one- or two-cheque payments, this is particularly affecting their ability to receive timely payments. For business owners, the non-release of part of the funds owed to them has become a headache. Business owners have reported instances where a significant portion of the amount on the cheque was in the account, but the funds were not released, making it difficult for them to manage their cash flow.

A bank may withhold payment on a cheque if there is a risk that such payment would result in the account balance falling below the required minimum balance and thereby subjecting the account holder to fines and charges.

In the event that a customer has outstanding loans, charges, or a minimum credit card balance with the bank, the bank may be entitled to retain monies in order to settle any such payments owed to it by the customer.

The foregoing provisions give rise to certain questions for banks, particularly with respect to administration and compliance. Banks may therefore be waiting for further guidance or the practical implementation of the law before taking action.


Business owners are experiencing a significant impact due to the banks’ reluctance to release funds. The non-release of funds owed to them is becoming a significant issue for businesses in the UAE. With banks bouncing the entire amount of the cheque, it takes a long time for business owners to collect the funds they are owed, causing significant financial strain.

According to a banker, in the UAE, when there are insufficient funds in an account, the standard practice is to return the cheques until further clarity is given by the attorneys. This practice is in line with the provisions of the UAE Commercial Transactions Law No. 18 of 1993, which provides that a cheque shall be payable only if the drawer has sufficient funds in their account.

The banker acknowledged that implementing a new process for dealing with insufficient funds and cheques for partial payment may take time to understand fully. However, they expressed hope that the process would be streamlined soon.

Bounced Cheques and their Impact on Landlords

Despite the legal remedies available, landlords are facing significant challenges in pursuing their legal rights. Banks in the UAE have been known to refuse to cooperate with landlords, making it difficult to recover the amount owed. This is particularly problematic in cases where the tenant has absconded from the UAE, as it becomes difficult to enforce the legal judgement.

What the The 2023 Civil Procedure Law states about Bounced Cheques?

Part 11 of the New Civil Procedure Law pertains to payment orders, also referred to as Writs of Debt. These payment orders provide an expedited process for obtaining a judgment against a debtor without the debtor’s input, as long as certain procedural requirements are met, and the debt in question is confirmed in writing for a specific amount and not contested.

However, the section explicitly notes that under Article 212.2.d of the Code, a cheque is considered a Writ of Execution, rather than a Writ of Debt. Article 212.2 covers Execution Writs.

Consequently, the new law confirms that in situations where the issuer of a cheque lacks adequate funds, and the beneficiary is unable to cash it, the beneficiary can pursue enforcement without initiating a substantive case to establish their entitlement to the bounced cheque.

Hurdles in filing Civil Cases for Bounced Cheques

In order to file a civil execution case for a bounced cheque in the UAE, it is necessary to provide a letter from the bank verifying the absence of funds in the account, including any partial amounts.

Upon receiving a memo for the bounced cheque, the recipient must revisit the bank and request partial payment, for which the bank will issue a partial settlement certificate.

The process for claiming partial payment is specific to each bank and may vary. After receiving notice of insufficient funds from the bank, the cheque issuer must follow the bank’s individual process to claim the partial payment.


Despite changes to the UAE law that allow for the release of funds in the cheque issuer’s account, most banks in the UAE are still bouncing cheques in full. This practice has caused significant problems for business owners and landlords. The non-release of funds owed is a significant issue for businesses in the UAE, causing financial strain and impacting cash flow. It is imperative that banks in the UAE comply with the legal changes and release the funds owed to individuals and businesses in a timely and efficient manner.

In consideration of the economic benefits of partial payments, the UAE law has been amended to remove the obligation on banks to seek permission from the account holder before making such payments. This amendment is intended to speed up payment processes and reduce the risk of court proceedings for both parties involved.

Partial payments can be of great assistance to the recipient as they help to manage their cashflow more effectively. The amendments to the law recognize the value of partial payments and their potential to support the financial wellbeing of individuals and businesses.

Furthermore, the removal of the obligation on banks to seek permission before making partial payments is expected to streamline payment processes, enabling faster and more efficient transactions. This will also help to minimize the risk of legal disputes arising from delayed or non-payment.

It is important to note that the amendments to the law do not negate the responsibility of the bank to act in accordance with the terms and conditions of the account agreement. Banks must still comply with their legal obligations and ensure that they adhere to the rules and regulations governing banking practices in the UAE.

The amendments to the UAE law regarding partial payments and bank obligations are a positive development for both account holders and banks. The changes recognize the value of partial payments and promote more efficient payment processes while ensuring that banks remain compliant with their legal obligations.

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