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Tue 24 Mar 2015 12:16 PM

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Bouncing a cheque should not land you in jail, says Emirates NBD CEO

Boss of Dubai’s biggest bank has said there is a need for a bankruptcy law

Bouncing a cheque should not land you in jail, says Emirates NBD CEO

The CEO of Dubai’s biggest bank has said there is a need for a bankruptcy law in the UAE that would avoid people being sent to jail for bounced cheques.

Making the bounced cheques a civil matter rather than criminal - and punishable with jail - has been an ongoing point of discussion in the UAE and has won the support of numerous high-profile banking officials.

In an interview with Arabian Business, Emirates NBD CEO Shayne Nelson said people who get into financial difficulty outside of their own control should not be sent to jail.

“I think we do need personal bankruptcy law within the UAE. If people commit fraud, obviously I expect them to be charged and to be dealt with by the authorities,” said Nelson.

“People who get into financial difficulties, not always of their own doing, I’m certainly not an advocate of using the prison system as a remedy and I think a bankruptcy law - I know there’s one being drafted - is certainly necessary for the development of the economy,” he added.

The experienced Australian banker, who took over as CEO a little over 12 months ago, said sending people to jail was not a good solution in cases of financial problems.

“I don't think that methodology is good for the government because they have to house these people and keep them. It’s not good for the banks - I don't know how you get your money back when there's someone in prison and they can't work. And I don't think it’s good for society,” he said.

Nelson said, however, that it’s a different case when fraud has been committed.

“It’s certainly important for us to make sure that we don't encourage fraud within the system and we certainly have to clamp down on that side. Sometimes, I suppose, you don't know whether it is fraud or not until you investigate it,” he said.

Nelson said banking in the UAE needs to move away from cheques and reduce the amount of cash in circulation and move towards electronic banking.

“One of the things I think that the UAE banking system and the central bank needs to work on is the amount of cash that people use in the UAE is very high against just about everywhere in the world.

The amount of cheques that people use is unbelievably high against the rest of the world.

“We have a very cash-cheque mindset within the UAE of how we do business, whether it be SMEs, corporate or individuals. There's a very big mindset there and we need to change that. It's actually not good for the economy to just be using cash and cheques. Electronic is far more efficient,” he said.

Nelson said more developments are expected this year in electronic payments and cash facilities, including a ‘cash-back’ option from all FPOS (point of sales terminals) used in shops and restaurants.

Read the full exclusive interview with Emirates NBD CEO Shayne Nelson in Arabian Business on Sunday, March 29.

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RK Menon 5 years ago

I agree with Mr Nelson that cheque return should not be treated as criminal offence rather it may be treated as a civil case. Also the person concerned should not be presented with jail terms without proper investigation and establishing the fact that any fraud is taken place.

However, the banks may allot loan and advances to the individuals based on the capability of repayment only. For luring the customers, the sales personnel from the banks or their associates should not use unethical methods.