Time to rethink the bounced cheques issue

It's time the UAE stopped the criminalisation of indebtedness; it only creates a burden on the state and prevents people from paying off their debts

Police are calling it a “social phenomenon” among men and women aged 18 to 35. It’s not a computer app or a dance craze, but the problem of bounced cheques. While cheques and chequebooks have been phased out elsewhere in the world, they remain central to the banking system in this country

If you want to rent a villa or an apartment, you are often required to write a series of postdated cheques – in the full knowledge that unforeseen circumstances could mean you may not have sufficient funds in your current account to cover the amount you are signing for. Some banks require customers to sign a blank cheque before issuing a credit card or a personal loan, and cheques are used in many everyday transactions where other forms of payment would be more efficient.

As The National reported yesterday, there were 79,525 cases of bounced cheques in Dubai alone last year – an increase of more than 10,000 on 2012. While the total amount owed had fallen, from Dh14.6 billion to Dh12.2bn, it is clear that this issue is affecting far too many people, especially those under 35 years of age.

Anyone who bounces a cheque and is unable to make good within a month is referred to the public prosecutor, with the most likely outcome a prison term until the debt is cleared.

As The National has argued previously, jailing people for indebtedness is counter productive, because it creates a burden on the state and it takes away the person's means of earning money to pay off their debt. While criminals who deliberately write fraudulent cheques deserve severe punishment, that's not the case with most bounced cheques.

The planned introduction of a national credit bureau by the end of this year will help address the situation by enabling banks to share data on customer lending, but there is one simple step that should also be taken: abolish cheques altogether.

There is no function a cheque can perform that cannot be carried out more efficiently and securely with direct debit payments, a debit or credit card, electronic transfer or good, old-fashioned cash. And, unlike a cheque, this sort of transaction won’t bounce.

The ultimate message for consumers, of course, is that if something is beyond your means, don’t buy it.