Personal loan rules abuse rife: CB

The UAE Central Bank has accused banks in the country of violating personal loan regulations it enacted nearly two years ago.

The Central Bank said it had also issued instructions to the country’s 23 national banks and 28 foreign units not to give credit cards to clients unless they deposit enough funds or have their salaries transferred to the issuing bank.

“The Central Bank has discovered many violations by banks regarding its rules about personal loans, mainly regulations stipulating that such loans must not exceed 20 times the client’s monthly salary and that banks must not take 50 per cent of the debtor’s salary,” said Khaled Al Kharji, head of the banks’ control division at the Central Bank.

“We have also noticed violations regarding issuing certificates by banks to their clients for debt transfer to another bank…this has raised questions on whether banks are intentionally delaying the issuance of certificates to block debt transfer.”

Speaking during an a Ramadan social evening meeting, Kharji said Central Bank’s personal loan rules enforced in mid-2011 do not include penalties against banks violating these regulations. “The Central Bank can only draw the bank’s attention to summon its senior management for a meeting on the issue,” he said, according to the Arabic language daily Emarat Alyoum.

Turning to credit cards, he said the Central Bank has recent instructed the country’s 51 banks not to provide such cards to clients unless they deposit a specific sum or have their salaries transferred to the issuing banks. “This measure is intended to prevent anarchy in the UAE’s credit card market,” he said.

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