UAE’s Banks Violate Blank Check Rules

Some banks in UAE are flagrantly violating rules that prohibit them from taking blank checks from customers who apply for personal loans or credit cards.

The UAE’s Central Bank last year issued wide-ranging regulations aimed at curbing loose lending practices and bank charges. Specifically, Article 15, Section B of UAE Central Bank regulations No.29/2011, states that: “Banks and finance companies are prohibited from taking blank checks for granting loans or overdraft facilities, or for issuing credit cards.” The regulations took effect in May 2011, Gulf News reported.    

A lawyer, however, said it’s a big deal when a security check bounces. Amer Syed Al Marzouqi, a Dubai-based criminal lawyer, said while banks asking for blank checks from customers may be breaking the law, this is hard to prove.

“The most that offending banks would get is a fine and/or a warning,” said Al Marzouqi. “Suing a bank for violating this regulation would be the last thing a borrower would do when he’s already facing financial difficulty.” “When a borrower gives a blank check, the lender can write the outstanding amount when the borrower fails to meet his obligations for whatever reason — it then becomes a bounced- check case. A lot of people are in jail for this reason alone,” the lawyer said.

“Even if a blank check was issued in violation of the Central Bank rules, this will not eliminate or diminish the criminal liability once a check bounces and is presented to a judge,” he said. “So never sign and give away a blank check. It’s big trouble.”