What are security cheques and why do banks need them?

A security cheque is essentially a collateral which all of the banks in the UAE require when any kind of finance or facility is provided to a client.

The bank will request either one or a number of cheques payable to the bank from where the product is being taken from. The cheques are undated and cover the full liability either across multiple cheques or as a total amount.

The bank requires such cheques to use in circumstances where the borrower defaults on the finance/credit which they had availed. The most common occurrence where the cheques are used, would be where payments have not been honoured for a period of time and any reminders or efforts to communicate have gone unanswered by the borrower.

Leave a comment

Your email address will not be published. Required fields are marked *