UAE banks could offer direct debit services as early as 5 October, bringing an end to the practice of writing post-dated cheques.
Currently, consumers in the UAE have to use standing orders or post-dated cheques to meet large recurring expenses.
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A spokesperson for the Central Bank said: "The introduction of the direct-debit system is a step in the right direction towards increasing the efficiency of our banking system.
"Given our focus as a regulator we believe it is necessary to have a prudent, stronger and stable economy."
The Central Bank did not give an official start date, but senior figures in the banking industry said some banks could launch direct debit by 5 October.
The new system will help banks cut costs from handling bounced cheques. Last year 1.4m cheques bounced in the UAE, representing one-fifth of all cheques used.
Jaap Meijer, executive director of equity research at Arqaam Capital, said: "Direct debit will be helpful in lowering payment system costs, and less costly than cheques, as well as easier for banks."
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