Monday, May 7, 2012

UAE banks enforce new cheque rules and Landlords ask UAE tenants for new cheques

Landlords have put up notices in their buildings, asking tenants to replace the old rent cheques issued last year, as banks have stopped accepting them.

“Kindly bring new cheques as old cheques are no longer being accepted by our bank,” said a notice posted in one building.
An owner of a building in Bur Dubai told this website: “We deposited a couple of rent cheques last month, but they still haven’t been cleared. Our bank told us that they are processing the cheques, but it will take a lot more time. So we have asked our tenants for replacement of the cheques.”

M Dimitre, who deposited a rent cheque early this April, still hasn’t got the amount credited to his account.

“I deposited a rent cheque in April. Even after a month, it hasn’t got cleared. I cannot get the cheque back as the bank says it is processing it. I have asked my tenant to pay me the rent for the next quarter in cash, or provide me with a new cheque.”

Property management companies, however, have taken the requisite precaution beforehand by not accepting any old cheques from tenants on renewal or for a new lease.

Zubin Firozi, Head of Property Management, Head Office, Better Homes, mentions: “In the beginning of 2010 we had notified most of our tenants of Central Banks’ regulations of the cheques, and the tenants on their renewals provided us with their new cheques.

“For new leases we had only a couple of cases where we faced this issue of the old cheque taking time to be processed by the bank, but since then we have been quite vigilant and only accept the new cheques from tenants,” he adds.

It was reported in January last year, UAE banks had started enforcing rules by the Central Bank to turn down old cheques and accept only those with high security standards within a drive to combat forgery and ensure monetary stability. Banks, nevertheless, continued to accept old cheques.

In a circular to banks in late 2009, the UAE Central Bank asked banks to switch to the new money tools in a bid to prevent fraud and set a deadline at the end of 2010. It told the banks to ensure that the new cheques to be issued are thermo-chromic sensitive and chemical sensitive.

While being thermo-chromic sensitive will prevent fraudsters from using the colour photocopy of cheques to cheat unsuspecting people, the chemical sensitivity will render it impossible for anyone to tamper with the signature or remove or alter the content on the cheque leaf.