Bahrain: CBB issues early debt settlement guidelines |
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The Central Bank of Bahrain (CBB)Central Bank of Bahrain (CBB)
yesterday announced new guidelines with maximum fixed charges for the banks for an early debt settlement by the consumers.In case of non-compliance the bank will be served with warning or face fine from the regulator, a senior official at the CBBCBB
said.Khalid Hamad, Executive Director Banking Supervision at the CBBCBB
, highlighting the salient features of the initiative at a Press conference said the move would minimise the impact of over-charges on consumers in early debt settlements noticed by the central bank.The CBBCBB
had issued about 15 warnings to the banks in the past three years for violating the prescribed rules with regard to the consumer banking. The CBBCBB had also slapped a maximum BD 20,000 fine for non-compliance.The CBBCBB
had issued guidelines on settlement of pre-mature loans in April last, making it mandatory for the banks to strictly adhere to the percentage at the time of early settlement of loans.Bahrain's outstanding public debt is around 11.8 per cent of the GDP or BD705 million at the end of second quarter of 2008. The maximum levies for an early settlement of consumer and mortgage loans are maximum 1% or BD 100 for consumer loans (whichever is lower) for the mortgage loans 0.75% or BD 200 (whichever is lower). The CBBCBB
also devised a formula for the banks to pay-back the insurance premiums for the unused period of any loan to the consumers.Khalid Hamad, who was joined by Shaikha Nayla Al Khalifa, Head of External Communications at the CBBCBB
, said the CBBCBB move was a part of efforts in creating a healthy, transparent and profitable banking industry in the Kingdom."This initiative of the CBBCBB
is derived from the need for greater transparency in service charges for the protection of consumers and that it will enhance competition among banks.The CBBCBB
, he said, is never and will not interfere in day-to-day affairs of the banking business in Bahrain. However, he added, sometime becomes mandatory for the CBBCBB as a regulator to put its foot down when consumer face unfair treatment from the banks. Earlier this year, the CBBCBB had launched a pioneering service to disseminate information related to fees charged by the Kingdom's retail banks for various consumer-related banking services. With this, CBBCBB had become the first central bank in the Middle East region to publish a regularly updated banking-service-charge schedule.The availability of such information, he said, on the CBBCBB
website would also enable consumers make informed decisions about services offered by banks.Talking about the templates posted on the CBBCBB
website in December 2007, Yousif Hassan, Director, Retail Banking Supervision CBBCBB, said: "The banking service charge schedule is designed to enable consumers to easily compare fees charged or interest rates levied by various banks for the same service or product."By Mahmood Rafique Business Correspondent
© Bahrain Tribune 2008
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