Banks hold on to guarantee cheques

Some banks in the UAE are holding back guarantee cheques even after customers clear their dues and close or cancel their credit cards,  reported  'Al Khaleej' newspaper.

Customers who sought guarantee cheques back complain they were told by banks that their cheques would be destroyed later, the report added.

One Sharjah-based client of an Islamic bank was assured by an officer at the bank that his guarantee cheque would be cancelled but he could not take it back as it was against the bank's policy. The client, inturn, has decided to take legal action.

Shikar Krishna Murthy, Chairman assets and liabilities of individuals, EmiratesNBD, said: “The bank has a clear policy of issuing a letter of guarantee to customers once they fulfil all obligations and settle dues on the cards or other credit facilities. The guarantee letter includes the pledge by the bank that it will destruct the clients' guarantee cheque/s used as security."

"This letter will serve as proof that the client has successfully closed the credit cards and protects him/her in case the bank submits the cheque in future ," he added.

Similarly, if the client needs clearance for any specific purpose, then the banks can re-issue the same following a submission of request by the client.

Some unhappy clients demand central bank intervention to settle the issue.

Meanwhile, experts say it is illegal for banks to hold on to guarantee cheques after the credit card dues have been cleared or the cards cancelled and there is proof of no transactions for at least 45 days.

Clients have the right to reclaim guarantee cheques given to banks, added experts.

UAE banks allowed 45 days to cancel a credit card

Banks in the UAE need up to 45 days to cancel a credit card at the request of its holder and provide a clearance certificate due to new purchases or possible defaults, the Central Bank has said.

A Central Bank official, quoted by the Dubai-based Arabic language daily 'Emarat Al Youm', said reported persistent attempts by the country’s 23 national banks and 28 foreign units to dissuade clients from cancelling their credit cards are understandable within the marketing perspective.

The paper said the unnamed official was reacting to complaints by credit card holders that banks take a long time to annul cards at their request while bank employees persistently try to dissuade customers from cancelling their cards.

“The delay by banks in closing the credit card account is because the clients could have made new purchases by the card or they owe fees which are not due for payment yet…so the banks take a period of up to 45 days within the card closure request to provide the client a clearance certificate,” he said.

“This period is agreed upon by the banks and the central bank does not have any regulations for banks regarding the closure of credit cards as this is subject to general banking practices and the internal policy of each bank.”

The paper quoted the official as saying persistent attempts by banks to persuade customers to change their minds about closing their card account comes “within the framework of marketing and promotion.”

“But at the same time, no one can force the customer on doing anything which he does not want,” he added.

[Click here to read what a Central Bank official said earlier....]

[Click here to read interest rate cap on credit cards...] 

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