UAE central bank to curb personal loans, fees
Abu Dhabi, February 27, 2011
The United Arab Emirates central bank has introduced new rules to limit loans to individuals and bank service charges in the Gulf Opec member, it said in a statement on Sunday.
The UAE monetary authority said earlier this month that it would come up with new regulations to prevent banks in the world's third largest oil exporter from charging excessive fees.
The central bank has capped personal loans at 20 times the salary or the monthly income of a borrower with a repayment period set at 48 months, the statement said. Details about previous limits and bank charges were not provided.
The global credit crunch exposed borrowing excesses in the second largest Arab economy, where expatriates and nationals alike enjoyed lavish lifestyles helped by easy credit during the oil-fuelled boom years.
When Dubai's property bubble burst UAE banks were left with heavy exposure to the emirate's indebted state-owned firms, dragging down the oil-reliant UAE economy.
Bankers said the new rules represented only broad guidelines and each bank would use its own discretion in lending as well as for service charges.
'The idea is to not only bring about uniformity in lending but also to control personal loans that were liberally given by banks,' said an Abu Dhabi-based banker.
'The same goes for service charges which differed from bank to bank. Uniform charges will be viewed positively by customers,' said the banker, who asked not to be named.
The central bank set details of processing charges and fees that banks can charge for loans and credit and debit cards among other items.
The UAE also plans to launch a scheme to assess individuals' credit worthiness this year to help banks make better decisions when lending to individuals.-Reuters