Many coastal waters include large areas of Optically Shallow Waters (OSWs) where the sea-bottom affects above-water observations of remote sensing reflectance (Rrs [sr−1]). If not treated, the effect of bottom reflectance will interfere with the correct retrieval of Water Constituent Concentrations (WCCs) from hyperspectral and multispectral remote sensing observations. To study this phenomenon in more detail, the existing semi-infinite 2SeaColour Radiative Transfer (RT) model was modified into a finite water layer model, bounded by a diffusely reflecting surface at the sea-bottom. From simulations with the new model, called Water - Sea Bottom (WSB) model, it was observed that a ratio of spectral bands in the Near-Infrared, bands 750 nm and 900 nm, is nearly insensitive to the WCCs and increases with the shallowness of the water, and therefore can be used as a robust index to detect OSWs. The newly established Near-Infrared Bottom Effect Index (NIBEI) was applied to a series of satellite observations over the Wadden Sea during high and low tidal phases. Images from the MEdium Resolution Imaging Spectrometer (MERIS) and the Ocean and Land Colour Instrument (OLCI) were processed to retrieve WCCs of the study area. The results indicate that the sea-bottom effect in OSWs affects the accuracy of atmospheric correction and retrievals. On the other hand, applying the NIBEI to flag OSWs improves the reliability and consistency of WCCs maps. The application of proposed NIBEI on satellite images requires only Top Of Atmosphere (TOA) radiances at 750 nm and 900 nm and does not depend on atmospheric correction and ancillary local input data (e.g., bathymetry map, bottom type, empirical coefficients, in-situ measurements). As a result, the proposed NIBEI can readily be applied to detect OSWs on various ocean colour remote sensors in various shallow coastal regions.