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- Dubai 05:29 06:47 12:13 15:10 17:33 18:51
With customers across the country complaining against arbitrary hikes in bank fees and charges in recent months, UAE Central Bank Governor said yesterday that the country's apex bank will intervene and tackle the matter of exorbitant bank fees.
This website has been inundated with reader comments and experiences of all sorts of charges being levied by banks, putting immense pressure on already stretched budgets.
Now, Governor Sultan Nasser Al Suweidi has said that the Central Bank of the UAE will intervene in the determination of bank fees and commission rates as “matters are getting out of control” with banks in the country continuing to hike their fees and commission charges.
The governor said the Central Bank is considering a new regulation to control the excessive fees charged by some banks in the UAE.
“I agree that banks have increased their fees and commission rates and not interest rates. There is a new set of regulations that are coming, and the central bank will intervene because matters are getting out of control,” Sultan Nasser Al Suweidi told reporters on the sidelines of the inauguration of the Bankers’ Business Group yesterday evening.
Banks in the country have been hiking up charges and service fees arbitrarily in the aftermath of the global financial crisis, which has seen their profit margins constrained due to a rising cost of funding.
Bank fees for a host of services have gone up in the recent past. For instance, fees for issuance of a certificate of indebtedness that was between Dh200-Dh250 earlier is now Dh500; salary transfer fee has risen to Dh75 from Dh25; and account fee has doubled from Dh100 to Dh200.
According to survey conducted in the fourth quarter of last year by Arabic daily Emarat Al Youm, banks in the country impose 11 different kinds of fees on customers seeking personal loans.
Moreover, according to another recent survey, banks in the UAE charge the highest interest rates on credit cards in the region, with customers, disgruntled by inadequate banking measures, complaining about the hike in service fees.
In a circular published in November last year, the UAE Ministry of Economy warned dealers against overcharging credit card holders, saying any additional fee is a violation of the law.
Nevertheless, disgruntled customers across the Gulf say that they'd like to change their banks. According to Ernst & Young’s study Retail Banking in the GCC: Competing for Customers, 25 per cent of GCC retail banking customers plan on switching their bank within the next year. Another 10 per cent have revealed that they have already switched, citing dissatisfaction with their overall banking experience. The survey examined customers’ needs and the quality of their experience, reasons for attrition and how to prevent it, as well as ways to encourage customers to recommend their bank to others.
“With the worst of the economic downturn past us, retail banking customers are demanding better service from their banks and are willing to move to a better provider in the blink of an eye," Gordon Bennie, MENA Financial Services Industry Leader, Ernst & Young, said in a media statement last month.
"This demonstration of customer power is impacting banks who are starting to realize that improving customer experience is an effective way to increase financial performance and build sustainable banking franchises,” Bennie added.
Meanwhile, Suwaidi also maintained that liquidity in the UAE’s banking system was increasing. “I will stick to the point that there is increased liquidity,” he said. He cited an increase in the number of certificates of deposit at the central bank.
Al Suweidi also addressed the situation in Egypt. He said the central bank, as a monitoring committee, hasn’t seen any suspicious financial transactions from Egypt to the UAE as a result of the turmoil in Egypt. So far, it's “just business as usual,” Al Suweidi said.
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