The Central Bank on Monday sent UAE banks six news forms, which cover details about loan size and interest rates, that are to be used for personal loans, overdrafts and auto loans.
According to these new contracts, banks are authorised to ask borrowers to ensure their borrowings and that they should be covered by a life or disability insurance policy in order to guarantee that the loans are paid back, the central bank said. The six forms have ended more than a year of dispute between the central bank and commercial banks operating in the country.
Borrowers will now have to submit a salary certificate or a letter of employment showing the commitment to have his gratuities, end of service and salary transferred to the bank during the term of the loan if needed to cover the loan.
The first form is a one page notice which shows the formats of general terms and conditions for banks, finance companies and Islamic banks. The other documents relate to contracts on personal loans, overdraft facilities and auto loans.
The terms and conditions of the agreement are contained in 24 pages. These terms and conditions apply to all bank accounts, regardless of type, opened or maintained by the customer. These terms and conditions govern all the transactions conducted through these accounts.
Another document covers terms and conditions on Islamic banking, which is in 29 pages. The personal loan agreement is in 7 pages. The overdraft agreement is in 6 pages and the auto loan agreement is in 8 pages.
The forms were prepared after consultations and talks between the central bank and Emirates Banks Association, which represents all the banking and financial companies in the UAE.
According to the personal loan agreement, the loan period shall be suspended and the borrower shall instantly pay the amount if the borrower was dismissed, if he transfers his salary to another bank without a prior approval of his bank, if he violates loan terms, if he defaults three successive instalments, or 6 non successive instalments, if he presents false or fake data, if he dies, or if he left the country on permanent bases.
According to the form, the bank is required to ask for an insurance policy on the life of the debtor to ensure the payment of the loan.
A well known Abu Dhabi-based lawyer told the Gulf News that these forms are formatted and written by advocates related to the banks to secure their money.
“All terms and conditions are not in favour of borrowers. The banks have all the authority to control the present and future lives of the borrowers and even more his family in case of default,” complained the lawyer.
Gulf News
