UAE lifts ban on loan transfers for nationals
Abu Dhabi, August 13, 2013
The central bank of the UAE has conditionally lifted a ban on transfers between banks of personal loans to local citizens, after the country's association of banks lobbied for the ban to be relaxed.
Enjoying financial support from a wealthy government, UAE citizens are viewed as attractive customers. So banks have been competing aggressively to persuade them to pay off loans from rival institutions and transfer the business to them.
This ignited an interest rate war among the banks, prompting the central bank to intervene; in May, it directed banks to halt loan transfers for three months while it studied the practice to find a solution.
The UAE Banks Federation then urged the central bank to lift the ban, and in a circular last week, the central bank said it would permit transfers to resume under three conditions, commercial bankers told Reuters.
The conditions involve procedures covering the extension of personal loans, the size of each loan relative to the borrower's income, and a maximum 48-month maturity for loans, the bankers said, declining to be named because the matter has not been discussed publicly.
"The conditions will help avoid abuses and better regulate loan transfers," one banker said.
A central bank spokesman declined to comment.
The UAE Banks Federation has successfully lobbied the central bank to suspend or modify several efforts to regulate the country's banking market over the past 18 months, including planned caps on mortgage lending and banks' exposure to government-linked debt. - Reuters
More Finance & Capital Market Stories
- IFC in $150m loan deal with Bank Audi
- SME funding focus for Abu Dhabi forum
- Insurance House posts second year of profit
- ETF global assets hit record $2.44 trillion
- Bahrain firms plan IPOs
- Serbia wins $1bn Abu Dhabi loan
- Key equity banker resigns from Saudi Fransi
- DMCC to boost Islamic commodity trade with tie-ups
- IDB, KIA units to invest in Morocco
- First Gulf to set up $1bn sukuk in Malaysia
- Singapore’s UOB Bullion and Futures joins DGCX
- Infrastructure investment ‘key to growth’
- BKIC declares 30pc dividend
- StanChart profit falls 16pc in 2013
- Veteran Saudi banker to head AMF
- Dubai World prepays $284m to creditors
- EFG-Hermes sells Damas stake to Mannai
- Ultra rich number to grow 35pc in Mideast
- Saudi IPO market 'set for big year'
- RAK 'exploring' ceramics unit stake sale
- Bahrain Bourse wins key UK award
- Alba backs Euromoney forum
- URC bond rating upgraded to stable outlook
- GCC urged to set up onshore financial centres
- Consolidation push paying off for Bahrain banks
- Mubadala to focus more on US, Europe
- Six banks join plan for shared customer data register
- UAE economy grows 4pc in 2013
- Egypt foreign reserves up to $17.3bn
- StanChart opens second branch in Iraq