New conditions will see banks and finance companies reduce interest rates without increasing the repayment period
The UAE central bank has issued new rules with regards to the transfer of retail loans from one bank to another.
The watchdog said in a statement that it has also amended regulations related to personal loans and other services offered to individuals.
Following the new amendments, banks and finance companies are obliged to reduce interest rates, without increasing the repayment period.
The move came after the bank’s board issued a decision in the official Gazette.
"Any borrower is entitled to transfer his personal loan/financing from any bank or a finance company operating in the country in return for an early repayment commission not exceeding 1 per cent of the remaining amount of the loan, or AED10,000 whichever is less,” the published statement said.
Banks and finances companies are also expected to reduce the interest rate for loans granted prior to the introduction of the new rule, without increasing the repayment period or giving additional loan or finance to the borrower.