UAE Central Bank has issued regulations to streamline personal loan services of banks in the Emirates.
According to the Central Bank, the new regulations, effective May 1, 2011, will be applied on the current loans in terms of fees only. They will not be applied on current loans in terms of term and payment and the size of clients' salaries. Therefore, there is no need to modify the terms of current loans, reported 'Al Khaleej' newspaper.
The apex bank will review points proposed by a group of Islamic banks. For instance, their suggestion to replace the word 'interest' with 'profit' would be studied. The bank will then work on preparing appropriate terminology to be used in Islamic banks.
Regarding credit card fees the Central Bank confirmed that it is not included in these instructions and banks can follow their own policies.
The Central Bank emphasised that the fees specified in the instructions should be applied as is. They can be modified only after the banking association takes up the matter with the Central Bank.
Similarly, pension loans must be equivalent to 30 per cent of client's salary at the time of retirement.
Service fees and commissions charged by banks should not exceed the figures specified by the Central Bank in its regulations. Any revision will be possible only after the Banking Association takes up the matter with the Central Bank.