| 20 Jul 2008 |
|
Oman: Banks try to reach consensus on personal loan amount
- Text size
Move to check excessive borrowing trend
MUSCAT -- Local banks are trying to reach a consensus on restricting maximum personal loan amount to an individual borrower to ease repayment burden of people. The move is expected to check excessive borrowing at a time when the cost of living is going up in view of inflationary pressures. "Banks are competing among themselves to offer personal loan to their customers. Different banks have various limits on the maximum personal loan amount. It varies from 50 to 70 times of salary, depending on the bank. The repayment period also varies from 15 to 25 years in the case of Omani nationals," said a senior banker.
"In several cases, as much as 75 to 80 per cent of salary goes to pay loan instalment. People are not able to repay such amount with increasing cost of living. Now, banks are looking at reaching a consensus on the portion of salary a borrower can repay as loan instalment," added the banker.
In fact, banks consider personal loan as the most lucrative business portfolio. "If the loan instalment is 50 per cent of the salary, borrowers will not have much problem," he noted, without giving an indication of the proposed ratio. Senior officials of local banks had a meeting, which was attended by a representative of the central bank. "There will be another meeting soon to discuss the issue further and reach a consensus," he added.
However, the official noted that the banks did not had any discussion to avoid undercutting of personal loan interest. The interest rate ceiling on fresh personal loans of commercial banks was brought down to 8 per cent from 8.5 per cent with effect from June 14. The reduction, which was aimed at giving a relief to small borrowers, was in line with the declining trend in interest rate in the international market, especially for dollar-dominated loans. The new rate is applicable to fresh personal loans and those who took loan before the reduction can close the loan to go for fresh loan with lower interest.
By A E James
© Oman Daily Observer 2008
Zawya is a distributor (and not a publisher) of content supplied by third parties and subscribers. Any opinions, advice, statements, services, offers, or other information or content expressed or made available by those third parties, including information providers, subscribers or other users of the Service, are those of the respective author(s) or distributor(s) and not of the Company. The Company neither endorses nor is responsible for the accuracy or reliability of any opinion, advice or statement made on the Service by anyone other than authorized Service employee spokespersons while acting in their official capacities. The Company is not responsible for any infringement of intellectual property rights or breach of any applicable law or regulation, including regulation in relation to financial services or the distribution of financial products, defamation, data protection, telecommunications (including regulations relating to excessive use, spamming or other abusive activities) or obscene, offensive or illegal content). Under no circumstances will the Company be liable for any loss or damage caused by a member's reliance on information obtained through the Service. It is the responsibility of member to evaluate the accuracy, completeness or usefulness of any information, opinion, advice or other content available through the Service. Please seek the advice of professionals, as appropriate, regarding the evaluation of any specific information, opinion, advice or other content.
Read the full Member Agreement
http://www.zawya.com/legal/NewsLetter.cfm?name=disclaimer
More News in Financial Services
Loading ...
Post a Comment
1.1 Contain any material which is libelous or defamatory of any person, is obscene, offensive, hateful or inflammatory or causes damage to the reputation of any person or organisation.
1.2 Promote sexually explicit material, violence, discrimination based on race, sex, religion, nationality, disability, sexual orientation or age or any illegal activity.
1.3 Be made in breach of any legal duty owed to a third party, such as a contractual duty or a duty of confidence.
1.4 Be threatening, abuse or invade another's privacy, or cause annoyance, inconvenience or needless anxiety.
1.5 Be used to impersonate any person, to misrepresent your identity or affiliation with any person, or be likely to deceive any person.
1.6 Give the impression that they represent Zawya.
1.7 Advocate, promote or assist any unlawful act such as (by way of example only) copyright infringement or computer misuse.