Fines not enough: UAE banks' body seeks tougher penalties for mortgage rule violators

The UAE Banks’ Federation has asked the Central Bank to introduce more stringent penalties against banks breaking new mortgage credit rules, including sacking senior bankers and temporarily suspending banks involved in such offences, the Federation’s chairman was reported on Sunday as saying.

Abdul Aziz Al Ghurair said the Central Bank’s proposed fines against abusers of the mortgage rules which will be enforced in December are not enough.

“We asked the Central Bank to introduce tougher penalties as fines are not enough,” he told local reporters in Dubai on Saturday.

“The Federation’s proposed penalties include sacking bankers who offend or circumvent such rules or temporarily suspending them.
“They should also include temporary suspension of banks involved in such offences.”

The Central Bank issued the long-awaited mortgage loan regulations two weeks ago and said they would be enforced a month after they are published in the official gazette.

Under those rules, the 23 national banks and 28 foreign units operating in the second largest Arab economy will be allowed to provide a loan of up to 80 per cent of the property value to Emiratis and 75 per cent to expatriates.

The Central Bank also told banks not to give loans that exceed 50 per cent of the client’s monthly income while the loan to UAE nationals must be cut to a maximum 70 per cent in case the property value is above Dh5 million.

Loans to expatriate clients must not exceed 75 per cent of the property value of Dh5 million or less and 65 per cent if the property value is more than Dh5 million.

As for clients buying property before construction or on the map, the maximum loan they can get is 50 per cent of the unit’s value.

Ghurair said the mortgage regulations satisfied the needs of banks and that it only changed the loan ceiling for Emiratis. He said banks had proposed 80 per cent cap for UAE nationals but the central bank set it at 70 per cent of the property value.

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