Banks in the UAE must carry out a credit check on customers before issuing a chequebook, according to a new circular sent to financial institutions by the Central Bank of the UAE.

Central Bank of UAE has issued a circular to banks with respect to the issuance of check books to improve responsible lending practices by banks.

The Central Bank also said for any new customers, banks shall issue a cheque book containing a maximum of 10 individual cheques to their customers.

After a period of six months and providing no cheques are returned (unpaid), further cheque books may be issued to customers, as per the approved procedures.

Banks ought to prompt their customers that returned checks because of deficient assets on the record will be recorded with the AECB and will contrarily influence the  creditworthiness of customers.

Banks have been likewise urged to encourage their customers to limit the utilization of checks and think about other payment methods (such as direct debits and bank transfers) where possible.

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