Clients have reported that their banks impose transaction fees, and place a new insurance fee, upon applying to reschedule existing loans, or take an additional "top-up", in addition to the value-added tax resulting from those fees according to the applicable.
They explained to «Emirates Today» that they had previously paid a transaction fee on the existing loan, along with the existence of a valid insurance, however their requests can only be accepted after agreeing to a 1% insurance, a transaction fee of 1% of the loan’s value, and the tax on both.
They added that those fees amount to 10 thousand dirhams, and they are charged to the loan amount, and therefore interest is paid on them also in addition to changing interest rates, calling on the central bank to intervene to stop these practices, and only take the fee once from the customer as long as the bank does not change.
On their part, two bankers said that the banks consider the extension of the financing period or the increase of the amount to be considered as a change in the value and duration, which requires new insurance, and new fees that differ from one bank to another, indicating that sometimes the customer is exempt from administrative fees a kind of promotion and care To maintain it, while insurance is compulsory according to the «Central» instructions.
New order
In detail, the customer (Salama A.) said that she had financing from a local Islamic bank, at a value of 300,000 dirhams, which she took about two years ago, but she finally needed an additional amount, so she applied to the bank, but the employee in charge informed her that this was being done Dealing with it as new, i.e. adding the balance of its old loan to the required amount, and considering it as new financing that requires the imposition of a transaction fee of 1%, equivalent to approximately 2,600 dirhams, along with an insurance fee also in the same amount, with VAT.
She added that the employee explained to her that full fees amounting to about 6000 dirhams will be added to the required financing so that you do not pay anything, indicating that the fees that are loaded on the principal amount are paid interest on them as well, meaning that they may reach 10 thousand dirhams, collected by the bank in Each time you request an additional amount.
Salama indicated that she resorted to her bank to request financing in order not to transfer to another bank, in order to avoid fees, but she was surprised that all banks deal in almost the same way, she said, calling on the central bank to intervene to stop these practices, and only pay the prepaid fee, or even impose it The additional amount required and not the entire financing.
An additional amount
For his part, the customer (Majid A.) said that he applied for an additional amount (Top Up) of 80 thousand dirhams on an existing loan of which he left 200 thousand dirhams, so the bank calculated the request as 280 thousand dirhams, and deducted the amount of 2800 dirhams a transaction fee , And similar insurance fee, with VAT deduction.
He pointed out that as a result, the employee raised the amount to cover the fees, to 290,000 dirhams, adding that he started repayment as a new loan with new interest, fees and insurance.
(Majed) asked: "Why did the bank not take a fee for the additional amount only as long as the insurance is valid, or even insurance with an amount appropriate to what I actually received?", And why do I pay an insurance fee twice and new treatment and new benefits?
He added, "I did not transfer to another bank so that I would not bear new fees, early payment, etc., and I preferred to stay in my bank, yet I regretted continuing."
In the same context, the statements of two other clients, preferring not to mention their names, coincided with what was said by (Salama) and (Majid), as the former stated that he had paid a new fee of 8000 dirhams, while the second had paid 10,000 dirhams, because of taking additional amounts on their existing loans .
Installment reduction
In turn, the customer (Faisal A.) said that he requested to reduce his monthly installment and extend the loan period in his bank, but the employee informed him of the existence of new insurance fees and a higher interest rate, indicating that the bank imposes a transaction fee, insurance fee and interest rate that is often higher than the previous one. Wondering the benefit of reducing the premium in this case.
Faisal called on the Central Bank to intervene to stop the banks from exaggerating the imposition of fees, to allow the extension of insurance, and not to count the transaction as if it was completely new.
New transaction
To that, the banker in one of the Islamic banks, Salama Abdul Karim, explained that the client submitted an application to take the "top up", or take an additional amount that he needed, that it cannot be separated from his old financing, as it is added to it and the monthly installment is arranged as a new transaction for the full financing , To require new insurance, because the existing was on a different amount, indicating that all banks deal in almost the same way.
Compulsory insurance
For his part, the banking expert, Muhannad Awni, said that taking an additional amount, or performing a rescheduling, is followed by a change in the financing period, so the insurance for the new period is adjusted, in addition to that the transaction or rescheduling fees are determined by the bank according to its policy, and sometimes the customer is exempted from it for purposes Promotion or to maintain customers, pointing out that insurance is compulsory from the central bank.
Two bankers: Banks view the extension of the financing period or the increase in the amount as a change in the value and duration, which requires new fees.
Clients called on the central bank to intervene, to only take the fee once from the customer as long as the bank did not change.