Business | Banking
Bahrain Central Bank issues directive on consumer banking service charges
The Central Bank of Bahrain has directed all retail banks to apply the "Code of Best Practice for Consumer Credit and Charging", issued in July 2007, in which a minimal set of rules and regulations should be followed while granting loans and providing any other banking service.
- Staff Report
- Published: 14:41 September 17, 2008
Manama, Bahrain: The Central Bank of Bahrain has directed all retail banks to apply the "Code of Best Practice for Consumer Credit and Charging", issued in July 2007, in which a minimal set of rules and regulations should be followed while granting loans and providing any other banking service.
Banks are also required to provide copies of the code to customers so that they may take note thereof and adequately assimilate the practices mentioned therein, the bank said.
The move is part of the bank's "efforts to ceaselessly provide updates on the latest developments taking place in the banking sector, especially those directly affecting consumers of financial products" and to "enhance transparency related to its recently initiated service on disclosure of fees charged for various consumer-related banking services by retail banks operating in Bahrain."
The bank issued a set of new rules relating early settlement of loans and refund of insurance premium in case of early settlement or topping up of loans. These rules are in line with the new amendments made to the CBB's Rulebooks updated in April 2008. Consequently, the fees for early settlement were set at one per cent of the outstanding consumer loan or BD100 whichever is lower and 0.75 per cent of the outstanding loan or BD200 whichever is lower in cases of early payback of mortgages.
Under the new rules, banks are required to refund the remaining part of insurance charges paid by clients in cases of early repayment or adjust the unused amounts of the insurance charges with the new facilities being offered, based on a specified formula for this purpose.
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