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UAE To Begin Direct Debit System On October 5

UAE To Begin Direct Debit System On October 5

The implementation of the country’s first direct debit system will see a reduction in the use of post-dated cheques to secure finances.

The UAE will begin using its first direct debit system from October 5, bringing to an end the use of post-dated cheques to guarantee loans and finances.

The Central Bank of the UAE announced on Tuesday that the registration process for its banks and finance companies has been completed, with the first phase of the country’s direct debit system expected to start working before the start of next week.

In a statement from the Central Bank, a senior official said: “Introduction of the Direct Debit System is yet another strategic initiative from the Central Bank; DDS will save time and effort for both clients and banks.

“Given our focus as a regulator we believe it is necessary to have a prudent, robust and solid economy. Our current intention is to establish a more convenient retail banking system that will create more efficient and progressive economic development.”

Until now, writing post-dated cheques was the common way to secure loans and finances in the emirates, with several cheques often needed for things such as a rental agreement.

Under UAE law, bouncing cheques is a criminal offence for foreign nationals, resulting in jail time.

The statement said the new system would be mandated for all loans and finances with a gradual implementation approach envisaged.

The next phase of the direct debit system will facilitate payments towards services such as electricity, water, telecom, credit card dues and insurance premiums.

The official said: “The introduction of the Direct Debit System is a step in the right direction towards increasing the efficiency of our banking system, and elevating it in line with the global best practices, thus strengthening the country’s status as a global financial hub.”

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