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Thu 18 Jun 2009 12:41 PM

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UAE publishes new transparency guide for banks

Banking regulator's move aims to restore confidence amid global financial crisis.

The UAE's top regulator on Thursday issued a draft of new corporate governance guidelines for its banking sector, the first update in seven years in a region that has been criticised as lacking transparency.

The Central Bank's guidelines are the latest efforts by authorities in the Gulf region to restore confidence in local banks, caught in a deep downturn as a result of the global economic and credit crisis.

Last year Dubai, one of seven emirates in the UAE, launched an anti-corruption drive, resulting in several high-profile arrests.

"Commercial banks are leading contributors to a successful UAE economy and are expected to show the way on high management standards and corporate governance," Central Bank governor Sultan Bin Nasser al-Suweidi wrote in a foreword to the guidelines.

"If a bank fails it affects the whole economy so (banking) directors are the guardians of financial stability," he added.

The governor urged banks to improve disclosure standards, increase transparency and to put risk committees in place.

"Such improvements will be value-adding and will reinforce the international competitiveness of UAE banks," he said.

The corporate governance guidelines are based on international regulations, but the central bank emphasised they "are firmly rooted in and tailored to the national environment."

Policymakers worldwide are seeking to reform the regulatory framework in response to the credit crisis. US President Barack Obama announced plans on Wednesday to overhaul the US financial regulatory system.

The Oman and UAE central bank chiefs expressed concern this week about commercial banks' exposure to two troubled Saudi conglomerates. (ReutersP

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Geekay 10 years ago

Banks have to be clear and transparent on their charges also. Public should not be attracted using adverts which do not give the full picture. Trapping customers when they lose their jobs by submitting the security cheque for clearing does not help either the bank or the customer. Banks for ever in the UAE has been overcharging customers on interest rates and other charges. Maximum ceiling should be fixed on interest rates and charges like in some neighbouring countries which will prevent the banks from taking undue advantage and will also promote healthy lending in the banking sector.

Geekay 10 years ago

Soon after the above article, I got my Dubai First CC statement which informs me my interest rate from next month will be 3.19% - 38.28% annually. The notice I get is 20 days including today. How unfair is this to a customer who has used up his limits and is trying hard to make minimum payments? I am not affected by this as I make full payments from time to time and finish off the debt. This now has givenme one more reason to get rid of this card for good. Again to stress on the point - Charges start lower and only go UP.. never look DOWN.. Banks are free to do what they want to the powerless customers.

Kaushalendra Gupta 10 years ago

The banks should be clear for the fees & charges for their products.The Central Bank of UAE must have a check on the banks regarding above mentioned.Take an example different banks charge fees & interest on their products but why these charges vary from bank to bank whereas they all are doing business in the same country.These fees & charges should be taken care by the Central Bank & should be uniform,a bit difference can be understood.th

The Don 10 years ago

To Geekay Just negotiate, make sense, and logically challenge the bank for any request/charges they are asking for. In my case I challenged my bank for a credit insurance contract which turned to be none-existence in the sense they don't have an insurance company behind it: it was just an internal fund in which premium collected from retail customers goes to it and they use it to write-off a portion of the debt.

Jim 10 years ago

One opens a bank accpunt volantarily, uses it for few years and closes it volantarily in line with all the weird rules and regulations laid by the bank. The other banks due to whatever reason will ask you a clearance certificate although you have a other documents hsowing account closed. To issue such a certrificate the original bank asks a exhorbidant fees for that. Such many fees are there which are unexplained.

nasir 10 years ago

i was astonished to learn that there is not fixed rate mortgage here, even the floating rates are non verfiable and banks can changes rates at will with no reference to the contract banks here have a lot to learn, but on the other side the regulators dont even know what they are supposed to do banks are exploting the customers and the govt does not care