Does the Bank Have a Right to Close a Customer's Account as a Result of Multiple Bounced Cheques?

Introduction:

In the UAE, it is legally permissible for banks to close a customer’s account if multiple checks are returned or (Multiple Bounced Cheques) due to insufficient funds. All the banks and financial institutions in the UAE are regulated by the Central Bank of the UAE. In such financial and legal matters, consulting a criminal lawyer can help individuals understand the implications and their legal rights regarding bounced cheques and account closures.

The central bank of the UAE issued a circular for the UAE Central Bank’s Consumer Protection Regulation (circular no. 8/2020) for all the banks in the UAE. According to this circular, the banks are obligated to inform customers in writing about the consequences of returned cheques. It stipulates the responsibility of all the banks to inform customers in writing about the consequences of returned cheques. These consequences include applicable fees, potential closure of the current account, and negative reporting to the Al Etihad Credit Bureau.

Furthermore, the central bank has stipulated that a customer’s account may be cancelled for two years if four cheques are returned within a year due to insufficient funds. If this happens again, the cancellation period is extended to three years, and any unused cheques must be recovered. The best law firm in UAE will be well-equipped to assist individuals in resolving disputes with banks and guiding them through regulatory consequences arising from financial infractions.

In the event that if customer’s account has been cancelled by the bank due to bounced cheques, the bank will be reported to the Al Etihad Credit Bureau. The customer’s credit score might decline as a result of this report. Moreover, this poor credit score could make it more difficult for them to get cheque books or open new accounts from other banks. According to central bank regulations, all financial institutions must investigate creditworthiness before providing such services. Working with the best lawyer in Dubai can make a significant difference in challenging adverse credit reports or negotiating with financial institutions to restore banking access.

What are the suggested courses of action?

If anyone has concerns that their bank account would be closed as a result of bounced cheques, they should first review the terms and conditions of their bank regarding cheque returns. Further individual can contact their bank’s customer service or relationship manager to understand specific policies. It is important to ensure sufficient funds are maintained in their account to cover issued cheques.

Conclusion:

It is possible for the customers to take preventative steps, and it will assist in protecting the individual’s credibility and maintaining a favourable standing with the bank.