What is a bounced cheque?
Bounced cheque (also known as ‘dishonoured cheque’ or ‘bad cheque’) is a cheque presented by the payee and rejected by the drawee bank when:
• The bank indicates that the funds available in the account of the drawer at the date of issuance are insufficient to cover the amount mentioned on the cheque, either partially or fully; the cheque is consequently rejected and marked by the bank.
• The bank receives an order from the issuer to refrain from paying the cheque.
• The drawer makes or signs the cheque in a manner that prevents it from being paid, like omitting or changing his signature.
• The drawer’s bank account was closed before the issued cheque is presented for payment.
In the UAE, the cheque bounce is a very frequent problem faced by people during their span in the country.
Bounced cheque issues may arise in a variety of commercial transactions, including but not limited to, companies’ exchanges, bank loans, property rents or purchases and individual transactions.
Therefore, it is crucial for every individual dealing with cheques in the UAE, to know how to issue and accept cheques properly, or how to handle situations when deposited cheques returned unpaid.
Since January 2, 2022, the dishonour of cheque on grounds of insufficient funds in the bank account of the payor is no more a criminal offence in the UAE. However, the payee of the cheque may file an execution case against the payor.
Once an individual is notified by the relevant court related to execution proceedings against him or her in the UAE, he or she may have to settle the execution amount within 15 days. If the execution amount is not paid within this period, the court may commence regular execution proceedings such as blocking of the bank account/s and attaching movable and immovable properties in the UAE.