In an effort to bring international best practices to the UAE economy, the central bank has announced amendments to the new transaction law.

We have already touched upon this in our previous blog. This updated law will come into effect on January 2nd 2022. Changing regulation surrounding bounced cheques will help the SME’s with their cash flow management.

These updated laws on bounced cheques will bring up UAE’s business environment up to international standards. This will make the UAE a much more attractive place to invest in.

Bottom Line

So let us get into some of the major changes that are being introduced.


Cheques that are issued without funds will be decriminalised, unless the cheque bounces due to fraud, forgery and bad faith. The new law tries to focus on preventative measures.

Partial Payment

Banks will be required to make partial payments from the accounts, if the amount in the account is less than the value of the cheque. This way the suppliers will have some more flexibility and confidence in taking up projects. The laws also try to focus on how the collection of the cheque value can be expedited.


The chequebook will be withdrawn from the transgressor. He or she may also lose the right to receive a new chequebook for the next 5 years. Additionally, the commercial or professional activity of the violator may also be suspended. The focus of the updated laws are to implement deterrent alternative penalties to reduce the misuse of the cheque.

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What are the advantages of this update?

1) Considering that these updated laws will improve business standards in the UAE, it will become a much more attractive place to invest and conduct business. Which also means that it will increase UAE’s ranking in the Global competitive index.

2) Another advantage is that it will reduce the workload on the UAE courts by reducing bounced cheque related cases.

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