Abu Dhabi: The final countdown is on to introduce the direct debit system (DDS), a mechanism to make automatic loan payments without the use of cheques, according to the UAE Central Bank.
The DDS which will be effective as of June 15, 2013, will help settle everything from mortgage instalments to credit card bills, and any other financial commitments.
The Central Bank told Gulf News that the “DDS will save time and effort for both clients and banks. Before the implementation of the new system, the clients had to sign many post-dated cheques whether it was for auto loan or for personal loan or even for a credit card.”
“This bureaucratic measure will be over and the client will have to sign only one document which authorises the bank where his salary is transferred, to deduct directly from his account. The client will not be worried about any payments or late payment charges,” the Central Bank said.
The Central Bank had earlier announced that the DDS will enable clients to make regular and automatic payments from their bank accounts towards mortgage loans or credit card payments or personal loan instalments.
Amer Numan Ashour, chief analyst and economist at CNBC Arabia, told Gulf News that the system is in force in the UK and in India for many years now and it will prove useful for the UAE.
“The DDS is very simple and suitable for bank clients as it will save their time and efforts. The first is that payments are carried out instantly with no clearing of payments and this type of payments will save money as there is no need to print out many cheques and documents that the clients have to sign in order to authorise the deduction process,” said Ashour.
He added that this system will also help improve banking services and enhance clients’ satisfactory levels, labelling it the most suitable move so far during 2013 in the banking sector which will positively boost the system’s efficiency.
“The move also helps to decrease the number of bounced cheques. This will reduce the cases transferred to courts and help people plan their expenses in a proper manner,” concluded Ashour.
