Bahrain's New Shura rules to govern instalments

The new rules will also seek to ensure that the customers pay the seller regularly, without delays or disruptions


Payment of instalments for services, products and electronic appliances could be governed by new rules currently being drawn up by the Shura Council, the GDN has learnt.

The move follows claims that traders are unfairly capitalising on people’s needs and inability to pay cash down, by charging inflated prices through instalment plans.

The new rules will also seek to ensure that the customers pay the seller regularly, without delays or disruptions.

The draft legislation has been presented by Shura Council member Bassam Albinmohammed and is being reviewed by the financial and economic affairs committee.

The committee is now working to bring it in line with the 2006 Central Bank of Bahrain and Financial Institutions Law.

“Greed is driven by people’s need for services, products and devices and unfortunately providers take payment by instalments as a way to profit hugely,” Mr Albinmohammed told the GDN.

“For example, a device that costs BD500 is being sold for BD700 on instalments, which is a mark-up of 40 per cent, and this increase is unacceptable,” he added.

“Agreed, new offers, models and versions come out on a regular basis and that payment by instalments take longer to collect in comparison to cash-down payments but that is no excuse to take advantage of customers.’

Mr Albinmohammed said people tended to buy things on instalments because most of their income goes in paying for loans from banks, credit cards and other expenses and they have no hope of getting more financing.

He said there should be an acceptable interest rate charged for payment by instalments.

“The percentage of interest has to be worked out in compliance with the Central Bank of Bahrain rules that are applied on banks and facilities providers with it being reasonable and affordable without putting people under extra financial burden,” said Mr Albinmohammed.

“Now with Covid-19 affecting people’s standard of living, payment by instalment has become popular and it will become more popular as the market starts to show the impact of the coronavirus.”

Committee chairman Khalid Al Maskati told the GDN that the new legislation would see the introduction of a ceiling.

“Whatever would be served or offered on instalments should not exceed a certain cap as we look into a varying range in line with acceptable interest rates,” he said.

“People’s needs shouldn’t be used as a platform to fulfil greed; things should be sensible.

“We understand that providers take into account costs of buying in full or instalments, but the amounts taken are extremely high or see interest taken first rather than merged with actual payment.”

He said providers would also be given guarantees under the new legislation.

“What if someone buys flight tickets for future travel or equipment and then can’t pay, the provider is not like a telecom company that can cut the service,” said Mr Al Maskati.

“It leads to a lengthy court battle and for low commercial amounts, so there has to be guarantees for payments similar to bank loans but different in mechanism.”

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