Including his initiative to pay the largest part of the principal debt
Two bankers: 3 basic conditions for exempting a defaulting customer from interest
Banks sometimes balance between collecting the principal of the loan without interest and incurring litigation expenses.
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Awatef Al-Harmoudi: “The Central Bank only directs banks to relieve customers, as happened during the pandemic.”
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Two bankers said that exempting the defaulting customer from paying the interest imposed on the loan or credit card is subject to three basic conditions, which are his initiative to pay the largest part of the principal debt, and his previous commitment to pay the installments on time, as well as his success in convincing the bank that the circumstances he is going through It is out of his control.
They stated to "Emirates Today" that the central bank directs banks in general to relieve customers in exceptional circumstances, as happened at the height of the spread of the "Corona" epidemic, but it does not impose a specific form or specific mechanism for that.
In detail, the banking expert, Awatef Al-Harmoudi, said that exempting the troubled customer from the profits can only be done according to a thorough study of his case, as every bank usually insists on collecting all of its profits, because in the end it pours into the annual profits, and no one can grant exceptions from Without the customer himself taking the initiative to pay the principal or the largest proportion of it, which means that he is well-intentioned, but he faces difficult circumstances that may not enable him to pay the full amount of his debt with profits.
She added that in this case, it is in the interest of the bank to take the principal of the financing, even if it exceeds the profits, especially if it is confirmed that the customer is unable to pay in the future.
She stated that the Central Bank only directs banks to relieve customers, as happened in the pandemic, but it does not require them in a specific form or mechanism, leaving implementation according to the policy of each bank separately.
Al-Harmoudi indicated that the customer's credit history is also one of the important factors in studying his exemption from profits, pointing out that the customer must convince the bank of the compelling circumstances he is going through with which he cannot pay the profits.
For his part, the banking expert, Mustafa Ahmed, said that banks sometimes balance between collecting the principal of the loan without interest and incurring the expenses of litigation and other legal procedures, which take time and money, if they insist on collecting the full amount with the profit, so some loans are classified according to They are non-existent, if the bank is certain that it is not able to collect them, and compulsory provisions are made against them.
He explained that, for example, if the customer defaults on the credit card and offers to pay the principal of the card without the interest accrued on it, most banks agree in view of the high interest rate from which they obtained good profits throughout the period of using the card.
He indicated that the bank's conviction of the client's conditions and his previous commitment undoubtedly plays an important role in exempting him from paying interest and mitigating him.
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