UAE | Government
Central Bank urged to curb offer of easy personal loans
The Central Bank should curb the phenomenon of easy personal loans offered by banks in the emirate, the National Consultative Council said yesterday.
- By Nissar Hoath, Staff Reporter
- Published: 00:00 May 16, 2006
Abu Dhabi: The Central Bank should curb the phenomenon of easy personal loans offered by banks in the emirate, the National Consultative Council said yesterday.
The recommendations were approved and finalised by the house during its meeting yesterday. Speaker Abdullah Mohammad Al Masaood told the council the recommendations would be submitted to the Executive Council for further action.
Members in their recommendations said the Central Bank could bring changes in its policy regarding personal loans offered by banks.
The National Consultative Council (NCC) suggested the Central Bank come up with a law forcing all banks to follow a unified policy with regard to personal loans.
The other recommendations included limiting the repayment duration of personal loans to five years without rescheduling installments or renewing a loan and stop counting interest on the balance of a personal loan in the case when a borrower fails to pay or exceeds the period for the repayment.
They also suggested the Central Bank should hold a bank responsible for a default because of bad assessment when offering the loan, and the transfer of a person's salary to banks to repay a loan should not be made mandatory.
1,748 defaulters
They also called for a new regulation to control personal loans by fixing a ceiling for the interest rate charged for transactions between banks, and cancelling the provision of a cheque as a guarantee in offering a loan.
According to Abu Dhabi Police General Headquarters, 1,748 UAE nationals were reported defaulters from 1999 to 2004 with a total Dh2.727 billion in credits. Regarding bounced cheques, the council was told 35,418 cases involving Dh1.14 billion, had been registered with Abu Dhabi Police between 2002 to 2004.
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