New loan rule

KHAL­IFA IS­SUES DE­CREES ON DEBT COL­LEC­TION AND AT­TRACT­ING FDI

Gulf News - - Front Page - BY SARAH DIAA Staff Re­porter

The UAE Cen­tral Bank yes­ter­day is­sued a de­ci­sion to amend rules on loans given out to in­di­vid­ual bank­ing clients. The de­ci­sion ob­li­gates banks to re­duce in­ter­est rates when a cus­tomer is trans­fer­ring loans from one bank to an­other, rather than of­fer cus­tomers a longer re­pay­ment pe­riod.

The UAE Cen­tral Bank is amend­ing rules on loans granted to in­di­vid­ual clients across the coun­try, and specif­i­cally on the trans­fer of loans from one bank to an­other.

As per a de­ci­sion to change rules on re­tail bank­ing and on bank­ing loans and other ser­vices to in­di­vid­ual clients, banks and fi­nan­cial ser­vices com­pa­nies are ob­li­gated to of­fer re­duced in­ter­est rates when a cus­tomer is trans­fer­ring a loan be­tween banks. This is in­stead of in­creas­ing the re­pay­ment pe­riod for cus­tomers.

The move comes af­ter a de­ci­sion is­sued by the Cen­tral Bank’s board of di­rec­tors and pub­lished in the of­fi­cial gazette. It also comes amid a ris­ing in­ter­est rate environment as the US Fed­eral Re­serve (and hence the UAE Cen­tral Bank) hikes rates, mak­ing bor­row­ing more ex­pen­sive.

Un­der the new law, cus­tomers may trans­fer their per­sonal loan from any bank in the UAE 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 fi­nan­cial ser­vices com­pa­nies may ac­cept loan trans­fers un­der cer­tain con­di­tions, in­clud­ing their full com­mit­ment to the new rules, espe­cially those on the loan amount, du­ra­tion of re­pay­ment, and monthly in­stal­ments.

As for loans that were granted be­fore the is­suance of the new law, banks should still re­duce in­ter­est rates rather than in­crease the re­pay­ment pe­riod.

Ma­jor FDI hub

The de­ci­sion by the Cen­tral Bank yes­ter­day is one of sev­eral de­ci­sions is­sued by the UAE govern­ment con­cern­ing fi­nanc­ing and the econ­omy. An­other key de­ci­sion yes­ter­day was a de­cree is­sued by Pres­i­dent His High­ness Shaikh Khal­ifa Bin Zayed Al Nahyan that aims to pro­mote For­eign Di­rect In­vest­ment (FDI) in the coun­try and at­tract fur­ther in­vest­ment.

The de­cree-law No. 19 of 2018 aims to po­si­tion the UAE as a ma­jor hub for FDI, at­tract tech­nol­ogy, and pro­vide job op­por­tu­ni­ties in var­i­ous fields. Ac­cord­ing to the law pub­lished yes­ter­day in the of­fi­cial gazette, an FDI unit is to be es­tab­lished un­der the Min­istry of Econ­omy, which will set up as­so­ci­ated plans and work on their im­ple­men­ta­tion fol­low­ing ap­proval from the UAE Cabi­net. The FDI unit will also be re­spon­si­ble for es­tab­lish­ing a data­base for UAE in­vest­ments, in­clud­ing data on ex­ist­ing FDI projects.

Sul­tan Saeed Al Mansouri, Min­is­ter of Econ­omy, said the de­cree will drive a leap in the coun­try’s busi­ness environment. He pointed out that in­creas­ing the UAE’s at­trac­tive­ness for in­vestors is a strate­gic na­tional goal as it will help boost eco­nomic di­ver­si­fi­ca­tion ef­forts and in­crease liq­uid­ity.

Yes­ter­day, Shaikh Khal­ifa also is­sued a sep­a­rate fed­eral de­cree (No. 15 of 2018) on the col­lec­tion of rev­enues, in­clud­ing taxes, fees, and fines. Such rev­enues also in­clude those from state­ment in­vest­ments, pro­ceeds of in­vest­ment cer­tifi­cates is­sued by the state, and loans owed to the state, among oth­ers.

The Dubai In­ter­na­tional Fi­nan­cial Cen­tre (DIFC), one of the Mid­dle East’s fi­nance hubs. De­crees is­sued yes­ter­day are ex­pected to make the UAE even more at­trac­tive to in­vestors.

Newspapers in English

Newspapers from UAE

© PressReader. All rights reserved.