United Arab Emirates banks’ revenue from their retail business will probably decline 10 percent to 15 percent because of new central bank rules that took effect in May, an Abu Dhabi Commercial Bank PJSC official said.
“There will be a rebasing or a shrinkage of revenue” because of the rules like the cap on fee income, the prescribed debt-burden ratio and the higher margin on auto loans, Arup Mukhopadhyay, the bank’s executive vice president and head of consumer banking told a news conference in Abu Dhabi today. The affect, which will be muted this year since the measures were implemented in May, will restrict retail loan growth to less than 5 percent in 2012, he said.
The U.A.E. central bank imposed rules for retail banking and fees that capped personal loans at 20 times a borrower’s monthly salary and the repayment period at 48 months. They also restrict overall installments for all loans, including personal, car and housing loans, and credit cards to 50 percent of a borrower’s gross salary and any regular income. The regulator also capped fees for several consumer banking transactions.
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