Abu Dhabi — Mubasher: The Central Bank of the UAE (CBUAE) has commissioned lenders operating in the GCC nation to run credit checks with Al Etihad Credit Bureau (AECB) issuing them with cheque books.

The move is aimed at improving responsible lending practices by banks, according to the central bank’s circular to financial institutions.

For new customers, banks are limited to issuing a cheque book containing a maximum of 10 individual cheques. If no cheques are unpaid following six months, lenders may issue further cheque books in line with approved procedures, according to the regulator’s circular.

Banks have to inform customers that unpaid cheques due to insufficient money in their accounts will be recorded with the AECB, negatively affecting their creditworthiness.

The CBUAE also urged banks to advise their customers to reduce the use of cheques and consider other payment channels such as direct debits and bank transfers.

In November 2014, the UAE launched the AECB as part of its efforts to abolish irresponsible lending and bring about transparency to the lending industry.

The AECB assembles a credit record of the UAE’s financially active residents using data from banks, telecoms and utility firms.

In November, the AECB introduced a mobile and online service that allows borrowers to access their credit reports digitally.

These efforts have helped the GCC nation to slash bad cheques resurfaced over the first five months of 2018, compared to the same period in the previous two years, according to the UAE Clearing Cheque System.

From January to May, the UAE saw 515,000 bounced cheques with an approximate value of AED26.2 billion.

The CBUAE urged UAE residents last month to submit their Emirates ID to banks or risk the suspension of their debit and credit cards.