High service fees charged by banks and excessive lending practices are affected as part of a host of retail banking rules issued yesterday by the Central Bank.

The new rules cover personal and car loans, with limits capping the amount banks can lend to customers at 20 times their salary. They also set the period of loan repayment at 48 months.

In addition, the rules restrict service fees lenders can impose for personal accounts, cheques and debit cards.

Some of the new fees for bank transactions are as follows:

For opening new account – none
If balance is less than the minimum “monthly” - Dh25   
Non-arrival of salary  - none
Closure of account (if closed within one year of opening) - Dh100
Lack of sufficient credit in the account - Dh25
Issuing certificate of account balance - Dh50
Issuing clearance certificate - Dh50
Non-moving accounts - no charges
Teller transactions at branch (6 transactions monthly free) - Dh10 for each additional transactions
For cash withdrawal or deposit  - none
Postpone the payment of the loan – Dh100 for each time
Loan restructuring - Dh250
Bounced cheques - Dh100
Periodic statement of account - Dh25 outside period agreed on

Previously there was a Dh250,000 (US$68,066) ceiling on personal loans but few other limits on service fees. As a result, banks were able to extend huge loans to consumers.

"We have compared fees in the region and put them slightly above regional fees, but not as high as banks wanted," said Suwaidi.
Under the rules, banks will be limited to charging a maximum of Dh25 for replacing lost or stolen ATM cards.

Closing an account within a year of opening will cost customers no more than Dh100. The cost of issuing a chequebook will be capped at Dh30.

Fees for loans will also be regulated. Processing fees for personal loans will be capped at 1 per cent of the loan amount.

Penalties for early payment of a loan will also be curbed. Banks will not be allowed to charge more than 1 per cent of the remaining loan balance if a customer settles a loan early.

Those not complying with the rules will face fines.