How the loan cycle works
• A security
cheque is taken by the bank as a guarantee for the loans and credit
The amount on the security cheque is equivalent
to loan amount plus 20 percent of the principal.
In the case of credit cards, the amount on the
security cheque the card limit plus 20 percent.
When a default is recorded, first the customer is
contacted and the legal implications are explained.
When unable to contact the customer, references
given in the loan application document are contacted.
In most cases banks wait up to three successive
non-payment of installments or credit card minimum payment outstanding
before security cheque is presented to encash the outstanding.
When the security cheque bounce, the bank files a
criminal case against the customer with the police.
After filling the criminal case, police
departments intimate residency departments which will stop renewing
residency visa of the defaulter, dependents and employees.
How to get out of legal fix posed by credit
Q: What are the legal options if credit card payments have not
been made and the case is referred to a court? Once the person
concerned gets a clearance paper from court and pays the fine amount,
will he/she be cleared from the blacklist? Can the bank still call him
and threaten for payment?
A: We understand that your queries are related to non-payment
of credit card dues and consequences thereafter as a defaulting
customer in case the bank files a criminal complaint against you.
It is a standard practice for banks here in the UAE to obtain a cheque,
as a security, from its customer covering the total credit facility
granted on the credit card, at the time of issuance of a credit card
to its customers. In case of default of credit card payments by its
customer, the banks may deposit the said security cheque after serving
several oral and written reminders to its customer. Upon dishonour of
this cheque, the bank will initiate a criminal compliant against its
It should be noted that pursuant to a default in non-payment of amount
due to the bank by the holder of a credit card, the bank might
initiate criminal and/or civil legal action against the holder of the
credit card. Pursuant to a criminal case filed by the bank against the
person who has signed the cheque, the court may issue a judgment
against the signatory of the cheque in accordance with the Article 401
of Federal Law No. 3 of 1987 regarding the Issuance of Penal Code,
which states, "Detention or a fine shall be imposed upon anyone who,
in bad faith, gives a draft (cheque) without a sufficient and drawable
balance or who, after giving a cheque, withdraws all or part of the
balance, making the balance insufficient for settlement of the cheque,
or if he orders a drawee not to cash a cheque or makes or signs the
cheque in a manner that prevents it from being cashed. The same
penalty shall apply to any one who endorses a cheque in favour of
another or gives him a bearer draft, knowing that there is no
sufficient balance to honour the cheque or that it is not drawable."
In case of a criminal complaint filed by the bank, a restriction will
be imposed on the signatory of the cheque from travelling out of the
UAE. Similarly in the event the bank files a civil case against a
cardholder, it may seek an order from the court to impose a
restriction on the cardholder to travel out of the UAE.
Upon payment of the outstanding amount to the bank, preferably before
the court pronounces the final judgment, the accused may obtain a
clearance letter from the bank and/or the court and thereafter the
accused is at liberty to freely travel in and out of the UAE.
The black listing and or travel ban cannot be lifted by the
immigration department until the bank or the Court provides a written
letter to the General Directorate of Residency and Foreigners' Affairs
that the customer's name can be removed from the black list including
lifting of the travel ban.
The bank can always call you to follow up on the payment of dues. On
what basis do you consider this follow up as a threat?
However, a defaulting customer of the bank should not issue a cheque
to the bank without writing an amount on this cheque as banks are
prohibited to obtain such a cheque in accordance with Article 15 (b)
of Central Bank of UAE Regulation No. 29/2011 related to "Regulations
Regarding Bank Loans & Services Offered to Individual Customers' which
states, "Banks and finance companies are prohibited from taking blank
cheques for granting loans or overdraft facilities, or for issuing
credit cards." (KT)
Will I be arrested at airport over unpaid
Q: I am a UAE resident working in a company. There is a police
case filed against me by a bank due to an unpaid loan and credit card.
I have been out of the country for more than two months. Now, I want
to return to the UAE and reach a settlement with the bank. What are my
options once I arrive in Dubai?
A: If the questioner comes back to the UAE, he will be arrested
at the airport as the system will flag his name in connection with the
case filed against him. The questioner will be presented to the police
station at Dubai Airport and his statement will be recorded. The
questioner can then ask the police station to release him on bail
after keeping his passport as guarantee. Accordingly, he will be
directed to approach the Public Prosecution to settle the matter or
refer the case to a competent court in case of non-settlement.(GN)
Once the payment is settled, bank has to submit a clearance letter to
police department and police will intimate residency department. Then
only the person’s name will be cleared from blacklist.
Q: I was working in Dubai, for more than six years. Four
months ago I went back home on vacation and didn’t return to the UAE
due to my father’s illness and also my financial problem. I have a
bank credit card and I didn’t pay it to the bank. Now I am unemployed
and unable to pay it.
After a month my company called me to come back but I didn’t go due to
family and financial problems. My company told me they were going to
cancel my visa. My visa also expired on September 2012.
I came to know that the bank filed a police and Interpol case against
me and my name is blacklisted and I can’t go back to Dubai or any
other Gulf country.
A: If you intend to repay the bank, you may delegate someone to
make the repayment to the bank on your behalf and to get clearance
from the bank to lift your name from the blacklist and Interpol list.
Thus, you may further settle the matter with your company either by
returning to work after the bank problem or ask the company to cancel
your residence visa legally to avoid violating the Labour Law as well
as the law of the Department of Naturalisation and Residence (Dubai
General Directorate of Residency and Foreigners Affairs)-GN.
(Department of Protective Systems) Activities
Driving in UAE
Emirates ID Lost
International Driving Permit
Labour Card Lost
(Vehicle Ownership Certificate)
Police Clearance Certificate-Dubai
PCC Attestation - UAE Embassy Delhi
PCC Out of Country
Related Business Activities
Validation Letter - Driving License