UAE Central Bank has issued regulations to streamline personal loan -will be applied on the current loans

UAE Central Bank has issued regulations to streamline personal loan services of banks in the Emirates.

According to the Central Bank, the new regulations, effective May 1, 2011, will be applied on the current loans in terms of fees only. They will not be applied on current loans in terms of term and payment and the size of clients' salaries. Therefore, there is no need to modify the terms of current loans, reported 'Al Khaleej' newspaper.

The apex bank will review points proposed by a group of Islamic banks. For instance, their suggestion to replace the word 'interest' with 'profit' would be studied. The bank will then work on preparing appropriate terminology to be used in Islamic banks.

Regarding credit card fees the Central Bank confirmed that it is not included in these instructions and banks can follow their own policies.

The Central Bank emphasised that the fees specified in the instructions should be applied as is. They can be modified only after the banking association takes up the matter with the Central Bank.Similarly, pension loans must be equivalent to 30 per cent of client's salary at the time of retirement.

Service fees and commissions charged by banks should not exceed the figures specified by the Central Bank in its regulations. Any revision will be possible only after the Banking Association takes up the matter with the Central Bank.

Personal loan regulations enforced from May 1

Central Bank says new regulations are published in the official Gazette.A new retail loan system announced by the Central Bank early this year to regulate personal lending will be enforced on May 1 after it was published in the official 'Gazette', a newspaper reported on Saturday. The central bank has notified the country’s 23 national banks and 28 foreign units that the new system had been published in the official Gazette on March 31, which means they must adhere to the new rules on May 1.

“When it announced the new loan regulations, the central bank gave the country’s banks one month to enforce them after they are published in the official Gazette,” 'Emarat Al Youm' Arabic language daily reported. “The new rules were published on March 31 and this means banks must enforce them on May 1.”

The new lending regulations capped personal loans at 20 times a borrower’s monthly salary and stipulated the loan must be repaid within 48 months.

The regulations cover all retail loans including personal, car, housing loans and credit credits. They are intended to control lending activity and excessive charges by banks following public complaints about a surge in bank fees.

Personal loans in the UAE, which has the largest Arab banking sector, had surged by at least 35 per cent during 2006-2008 before they sharply slowed down over the past two years following the 2008 global fiscal crisis and regional debt default problems, according to the Central Bank.

From around Dh109 billion at the end of 2006, personal loans jumped by nearly 39 per cent to Dh148bn at the end of 2007 and by about 54 per cent to Dh228bn at the end of 2008. Growth plunged to only around 3.9 per cent through 2009, when personal loans ended the year at 237bn.In 2010, personal loan growth slowed down further to nearly 3.7 per cent as they stood at around Dh246bn at the end of the year.

Total credit also slackened to just around one-three per cent through 2009-2010 compared with more than 30 per cent during 2007-2008 because of those crises and poor borrowing appetite by the private sector.

The figures showed credit to the private sector in the first 10 months of 2010 dipped by four per cent to extend a downward trend since the onset of the crisis.

While loans to the government and other public sector establishments continued to grow slightly, those to he private sector remained dormant as both sides appeared less enthusiastic to engage in lending activity.

the private business and industrial sector was hit hardest by the credit slowdown, plunging by nearly 8.1 per cent in the first 10 months of last year.

From around Dh607bn at the end of 2009, total bank credit to the private sector receded to nearly Dh582.9bn at the end of October

Etisalat and Du limit access to BlackBerry service Next week

DUBAI, United Arab Emirates (AP) — Emirati authorities seeking greater control over smartphone data are pushing ahead with plans to impose tighter restrictions on the most tough-to-monitor BlackBerry service next week, according to a senior telecom executive.

The proposed new rules, outlined earlier this month, have renewed questions about how far the United Arab Emirates is willing to go in allowing highly secure communications within its borders.The Gulf Arab federation threatened a far more sweeping ban on BlackBerry email and other services last year, but reversed that decision shortly before it would have taken effect.

Osman Sultan, chief executive of the telecommunications firm Du, told reporters Monday the latest policy ordered by regulators will go into effect May 1. He said he doesn't expect the shift to cause problems for customers, who will still have access to email, Web browsing and instant messaging.

Under the new policies, Du and its rival Etisalat — both majority owned by the government — are required to limit access to the Blackberry Enterprise Server to companies with 20 user accounts or more. That system provides the most secure communication on the handheld devices and is used by many international companies and government agencies.

Other users would need to rely on a less-secure system known as the BlackBerry Internet Service that experts say could be easier for authorities to monitor. Unlike the more secure BES system, which routes encrypted data through company servers abroad, the BIS system runs over the regular Internet.

"I don't see any reason for frustration for customers," Sultan said. "You can still access your corporate email via BIS. ... I don't see what really is the issue."

Shortly after details of its latest planned restrictions became public, the Telecommunications Regulatory Authority issued a brief statement reassuring BlackBerry users that all services would continue for both individuals and business customers. That prompted speculation it might roll back plans to limit the higher-security service.

It has not commented further on the matter since. It did not respond to a request for clarification Monday.But Sultan's comments suggest the restrictions are still moving ahead."The rule is still this rule," he said.

Research in Motion Ltd., the Canadian company that makes BlackBerrys, has previously said it is in contact with the regulator and understands that the rules could apply to other smartphone makers but aim to avoid affecting "legitimate enterprise customers." A spokeswoman said the company had nothing more to add Monday.

The UAE's smartphone policies have been closely watched since last summer when it threatened to shut off BlackBerry data services partly because of security concerns. It backed off the plan in October.

Critics saw the effort as a way to more closely monitor political activism in the federation. Although the UAE has seen none of the widespread unrest roiling other parts of the Arab world, authorities have detained at least four activists calling for democratic reforms in recent weeks.

In 2009, Du's rival Etisalat was caught instructing unwitting BlackBerry customers to download spy software that could allow outsiders to peer inside. It misled users by describing the software as a required service upgrade.

Dubai Government amends DIFC Law - provide greater legal clarity and transparency

His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, has issued Law No (7) of 2011, which includes amendments to a number of articles in Law No (9) of 2004 ('Original Law') that established the Dubai International Financial Centre (DIFC) as the first Financial Free Zone in the UAE.

Over the past seven years, DIFC has become the financial and business gateway between regional emerging markets and the international markets.

The amendments to the law provide greater legal clarity and transparency, and provide stronger support to DIFC's drive to become a global financial centre, complying with the highest levels of good governance and best practices.

Law No (7) of 2011, which incorporates the first ever amendments made to the Original Law, was enacted on the 4th of April, and published on Thursday, April 21, 2011, in the Official Gazette in both Arabic and English. It is in force with immediate effect. The new law comes as part of the Government of Dubai's ongoing strategic commitment to diversify the emirate's economy by supporting the growth of the banking and financial services sector through DIFC. The new law results from a consultative and collaborative process between the three DIFC bodies - the DIFC Authority (DIFCA), the Dubai Financial Services Authority (DFSA), and the DIFC Courts - and various Dubai government bodies, including the Legal Affairs Department of the Government of Dubai.

Following the Dubai Government's review of governance structures, the new law provides for the creation of a Higher Board comprising representatives of the three DIFC bodies. This Higher Board will be presided over by the DIFC President, Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai, and will be invited to meet at least twice a year. The DIFC Higher Board will ensure that the three DIFC bodies operate in harmony and unity of purpose by strengthening the levels of coordination without affecting their independence.

Ahmed Humaid Al Tayer, Governor of DIFC said: "The amendments to Law (9) provide greater legal clarity and improve the corporate governance of DIFC. These changes further strengthen DIFC's legal and financial infrastructure as a whole, and reinforce the Government's commitment to the independence of each of the Centre's bodies. This is an important step forward in the growth of DIFC as a global financial hub and complements the Centre's continuous efforts to develop its services and increase its contribution to the UAE's economy." The new law includes a new article that defines the manner of appointment and the role of the Governor of DIFC. The Governor is appointed by the Ruler of Dubai upon the proposal of the DIFC President for a four year term that may be renewed.

The new law also clarifies the application of all Dubai laws to DIFC including governmental, financial and legal arrangements. This clarification creates many opportunities for future collaboration between DIFC and other government bodies, fostering cooperation and open dialogue thus enhancing the growth of banking and financial services, ancillary services and commercial and financial activities and strengthens its role in the region.

DIFCA-related amendments: Changes to the Original Law include a number of provisions that are specific to DIFCA. These confirm DIFCA's independence and put into place a corporate structure of a Board, CEO and executive body. The precise duties and powers of the Board and the executive have been defined, where the Board will be responsible to the DIFC President for the functions of DIFCA.

The new law also provides specific provisions clarifying that DIFCA is now responsible for establishing, regulating and developing the Centre's payment systems. DIFCA will coordinate with the Central Bank of the UAE in regulating, supervising, operating and using wholesale, large-value payment systems, including a multi-country, multi-currency Real Time Gross Settlement System, allowing the clearing and settlement of payments in foreign currencies in the DIFC.

David Eldon, Chairman of DIFCA said; "The new law will assist DIFC's continuous evolution and underlines its position as one of the world's top international financial centres. By emphasising the Centre's independence, the new law assures companies looking to establish a presence in the region that DIFC offers both a modern infrastructure and a world-class business environment." DFSA-related amendments: A DFSA-related article in the new law clarifies the roles and powers of the DFSA's Board and CEO, reinforcing the autonomy and authority of the DFSA's board.

The Chairman of the DFSA Board of Directors, Abdullah M Saleh, commented; "DFSA welcomes the new law as a further positive step in the development of the Centre. DFSA will continue its commitment to protect the integrity of DIFC and to realise the vision its Sheikh Maktoum. " DIFC Courts-related amendments: The amendments made to DIFC Courts-related provisions further reinforce the Government of Dubai's commitment to the independence of DIFC Courts, by guaranteeing its funding and authorising the Chief Justice to determine the Courts' rules, procedures, staffing and operation.

Michael Hwang, Chief Justice of DIFC Courts, said; "The revisions to the law further reinforce the autonomy and independence of DIFC Courts. A fair, efficient and transparent judicial system operating independently is a critical component of DIFC's offering as a world-class financial centre. We remain committed to uphold the laws of DIFC to the highest international standards, and the new law supports this commitment."

Six months out of country for Labour Card cancellation in UAE

Companies must submit proof of absence along with documents of due settlement.

UAE employees who stay outside the Emirates for more than six months can have their labour cards cancelled. This was revealed at the weekly labour ministry meeting, according to 'Al Ittihad' newspaper.

The ministry officials refused to accept an employer's request to cancel an Arab's labour card who has been outside the country for only five months.

The company was asked to wait for another month and then submit the proof of the worker's absence to the department of naturalisation and residency along with documents to prove settlement of all his dues. Only then can the employer apply for cancellation of the worker's labour card.

Contract amendment

Addressing another case, ministry officials clarified that companies can amend contracts - change names of professions or salaries - only in the presence of the employees concerned. Else it will be considered a violation of labour rights.

Temporary work permit

Issuance of temporary work permits would depend on the type of labour dispute and would be considered by the ministry only once the case has been referred to the labour court. Once the terms and conditions as stipulated by the labour laws are adhered to, the ministry reserves the right to issue temporary work permits without the approval of employers. Similarly, the worker in dispute, need not necessarily have a residence visa provided it is proved that the case has been referred from the labour court.

Job transfer

Workers under three skill levels can end their contract without an agreement with the employer even before completing two years. They include employees who have a bachelor's degree and earns a minimum Dh12,000; or diploma holders with Dh7,000 monthly salary; and those who possess secondary school certificate earning Dh5,000.

Meanwhile, officials approved a request of a company to hire as director a Brit who has no university degree but holds a certificate from a institute which he attended for three years after high school.

Explaining its decision, the labour committee, including Khalil Khouri, Director of work permits, and Saleh Al Jabri, Director of the Unit of facilities in Abu Dhabi, said in this case the employee has 10 years experience in the same job at the headquarters of the company in his country.