UAE to amend retail-banking rules
Under the new rule, the bank set new terms and conditions for the transfer of personal loans or personal finance
Abu Dhabi: The UAE Central Bank has decided to amend retail-banking rules related to personal loan and other services provided to individuals.
Under the new rule, the bank set new terms and conditions for the transfer of personal loans or personal finance from one bank or a finance company to another.
As per the rule, banks and finance companies are obligated to reduce the interest rate, not increasing the period of loans and other facilities for retail loans, which will be given to individual customers after the issuance of the new amendment.
The move came after a decision issued by the bank’s board and was published in the official gazette.
As per Federal Law No 10 of 1980 concerning the Central Bank, the monetary system and regulation of the banking profession, and after having reviewed its thereof and regulation No. 29 of 2011, the bank’s board has decided to replace paragraph (B) of article 20 concerning personal loans as follows:Any borrower is entitled to transfer his personal loan/financing from any bank or a finance company operating in the country in return for an early repayment commission not exceeding 1 per cent of the remaining amount of the loan, or Dh10,000 whichever is less.
Other UAE-based banks or finance companies are entitled to accepting the transfer of the personal loan under certain conditions, including their full commitment to the new rules, especially those related to the loan amount, duration of repayment and monthly instalments.
Regarding loans that were granted before the issuance of the new rule, banks and finance companies should reduce the interest rate and not to increase the repayment period, or giving additional loan or finance to the borrower.