Loan repayment plan for retirees amended
In compliance with Royal Directives of His Majesty Sultan Haitham bin Tarik and taking into account the financial situation of retirees of public and private sectors, the Central Bank of Oman (CBO) has amended the terms of repayment of loans granted to them. The amendment is being carried out in cooperation with the banking sector and the Capital Market Authority.
The measure will apply to personal and housing loans and finances granted to retired employees. According to the amendment, the maximum debt service percentage (deduction) should not exceed 30 per cent of the monthly retirement pension if it is equal to or less than RO1, 500 and 35 per cent if the monthly retirement pension is more than RO1,500. However, retirees may agree with banks on a bigger percentage deduction on personal and housing loans, provided it does not exceed 50 per cent and 60 per cent respectively.
Licensed banks may extend the period of repayment of the loan/financing until the retired person reaches the age of 70. When extending the period of repayment, banks must take into account the maximum permissible waivers do not exceed two installments per year.
In the event that banks are unable to recover the outstanding balance of the loan/financing before the retiree reaches the age of 70, they may deduct an advance payment (without imposing early payment fee) not exceeding 25 per cent of the amount of the end of service gratuity if the monthly retirement pension is equal to or less than RO1,500 or 35 per cent of the end of service gratuity amount if the monthly retirement pension is more than RO 1,500.
Accordingly, banks should not increase the agreed rate (interest) in order to reduce the financial burden on retirees, and the later must be informed in advance of the terms and conditions in order to achieve transparency and provide him with a copy of the agreed installment schedule.
CBO extended its gratitude to His Majesty Sultan Haitham for the directive to safeguard retirees financially.