The Central Bank of UAE is set to kick off the ‘Direct Debit System’ on October 5, following the completion of registration of banks and finance companies into the system.

Direct debit is a safe and convenient method of making payments and is ideally suited for regular payments with fixed or variable amounts electronically, said a statement.

An individual or corporate can set up a direct debit instruction by submitting a signed Direct Debit Authority (DDA) to the service provider.

Once a DDA has been setup then the payments are made automatically by the customer’s bank from the account designated by the customer in the authorisation, upon receiving a request through the UAEDDS from the creditor.

“DDS will save time and effort for both clients and banks. Given our focus as a regulator we believe it is necessary to have a prudent, robust and solid economy. Our current intention is to establish a more convenient retail banking system that will create more efficient and progressive economic development,” said a senior official of the central bank.

In the near future, the adoption of the system will be mandated for all loans and finances being advanced by banks and finance companies, said the statement.

The facility is designed to eliminate the need to sign several post-dated cheques (PDC) for installments upon obtaining a loan/finance, allowing banks and finance companies to reduce their reliance on PDCs.  Monthly installments can be claimed by the lending institutions by using the Direct Debit Request, it said.

The central bank indicated that the next phase of the system will facilitate payments towards services such as electricity, water, telecom, credit card dues and insurance premiums, it added. - TradeArabia News Service