For small and medium enterprises
Al-Markazi: A system that prevents financial institutions from “excessive pressure” to collect debts
Al-Markazi: The system facilitates providing the best products for small enterprises.
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The UAE Central Bank has issued the Market Conduct Regulation for Small and Medium Enterprises with the aim of promoting best practices among licensed financial institutions when dealing with such institutions.
The system requires licensed financial institutions to commit to imposing reasonable fees, and to refrain from exerting excessive pressure on dealers of small and medium-sized enterprises with regard to debt collection.
The Central Bank stated in a statement yesterday that the system provides small and medium enterprises with access to the correct and accurate information needed in a timely manner to make informed decisions, applies clear mechanisms to address complaints submitted by small and medium enterprises, and is obligated to provide appropriate advice on debt.
It requires licensed financial institutions to verify that the process of opening a bank account for small and medium enterprises has been completed within three working days, provided that the licensed financial institutions take appropriate due diligence measures regarding compliance with requirements related to financial crimes, and ensure that the small or medium enterprise poses a low risk. With regard to money laundering or terrorist financing.
The governor of the UAE Central Bank, Abdul Hamid Muhammad Saeed Al-Ahmadi, said, "The government has paid great attention to developing the ecosystem for small and medium enterprises, and has taken care to remove the obstacles facing the small and medium-sized enterprises sector to make it a transparent, pioneering and innovative sector."
He emphasized that the Central Bank seeks to maintain ensuring that small and medium enterprises enjoy the highest business standards when dealing with licensed financial institutions, expressing his full confidence that this system will facilitate the provision of the best products and services to small and medium enterprises.
Market behavior requirements for dealing with small and medium enterprises
Licensed financial institutions must:
To monitor and adopt high ethical standards and practices in dealing with dealers of small and medium enterprises, and to avoid any conflict of interest, and to prohibit sales, marketing and pricing practices that are exploitative.
Take the necessary steps to ensure that dealers of small and medium enterprises understand the terms and conditions of financial products and services.
Providing credit only to the extent of the amount that an SME customer can afford.
Disclosure of the reason for rejecting the requests of dealers from small and medium enterprises to obtain credit.
Appointing suitably qualified personnel to deal with clients of small and medium enterprises.
Informing the dealers of the main characteristics of products and services, which include risks, costs, fees, interest or profit rates, and the conditions that are not subject to change.
Ensure that all their authorized agents (commercial representatives of licensed financial institutions) comply with the Central Bank system.
It should provide impartial credit advisory services to borrowers who are having difficulty servicing their debts.
Embodying the principles of Islamic Sharia and adhering to them when providing banking products that are in compliance with the provisions of Sharia.
Charge reasonable fees.
- Allowing small and medium business dealers to easily switch their relationships between licensed financial institutions.
- Refrain from exerting excessive pressure on dealers of small and medium enterprises with regard to debt collection.
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