Noor Islamic Bank has identified 20 top-performing students from the Higher Colleges of Technology (HCT) in Sharjah for the scholarship programme in the disciplines of business management, information technology, and engineering.
The scholarship programme comes as part of Noor Islamic Bank’s initiatives to attract talented UAE nationals to the banking sector. Upon graduation, some of these students will be considered for appointment at Noor Islamic Bank.
Maheen Kamali, Emiratisation manager at Noor Islamic Bank, signed the contracts with the students in the presence of Tarifa Ajeev Al Zaabi, Dean of Student Affairs and Institutional Development, HCT, and Dr Jed Ryan, Deputy Director of the HCT.
“Offering scholarships is part of our corporate social responsibility efforts at Noor. Such initiatives support students in pursuing a career of their choice, while allowing us to articulate our keenness to discover national talent and integrate them into the workforce at the bank. We commend the students for their hard work and commitment that have won them the scholarship,” said Kamali.
Dubai’s non-oil foreign trade crossed the AED1trn ($272.3bn) barrier during the first nine months in 2013, compared to AED918bn in the same period in 2012.
Dubai Customs statistics showed that Dubai’s imports reached AED610bn, compared to AED546bn in the year-earlier period with exports and re-exports rising to AED399bn from AED372bn.
Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and chairman of the Dubai Executive Council, said Dubai’s trade sector will “undoubtedly witness tremendous growth over the coming few years” following the announcement that the emirate will host the World Expo 2020.
"Dubai’s highly reliable and efficient infrastructure and quality logistic services will be strong assets to facilitate and support the expected trade growth across the region," he said.
He also expressed satisfaction regarding the “strong results and the steady increase in the volume of Dubai’s foreign trade exchanges”.
Sheikh Hamdan said: “Trade is one of the key pillars in the overall structure of our local economy and a main driver for its growth. We look at the rising curve in trade volumes as an indicator of the success of our developmental strategies.”
Ahmed Butti Ahmed, executive chairman of Ports, Customs and Free Zone Corporation and director general of Dubai Customs, added: “The roadmap to the development of Dubai’s foreign trade for the upcoming years is crystal clear now… we need to implement commercial strategies that respond to the nature of on-going transformations in global economy.”
India ranked first among Dubai’s total non-oil foreign trade partners as trade volumes reached AED111bn, followed by China with AED99bn, and the US with AED65bn.
Gold represented the largest share of Dubai’s imports, followed by cellular and wired communication devices, then diamond, cars, and jewellery.
As for exports, gold came first, followed by raw aluminum, then petroleum oils, jewellery, cigars, cigarettes and tobacco alternatives.
Chief financial officers (CFO) based in the Gulf countries are more optimistic about the financial outlook, cashflows and organic growth of their companies compared to their counterparts in the Middle and North Africa region and the rest of the world, according to Deloitte’s latest Global CFO Signals report.
The Deloitte Global CFO Signals report provides highlights of recent CFO surveys results by Deloitte practices across the world. “The surveys, which were conducted in 17 countries and regions, illustrate that finance executives worldwide seem to be embracing recovery and setting their sights on expansion, despite continued economic hiccups”, said James Babb, Deloitte Middle East CFO Program leader. “The case of the Middle East is one of mixed optimism: while CFOs in the region reported improved expectations for revenues, capital spending, and hiring over the coming 12 months, the number reporting so is 38 per cent less than a year ago, reflecting less confidence in their outlooks.”
Predictably, optimism among surveyed CFOs in Syria fell by 13 per cent, while finance chiefs in the UAE reported a net 75 per cent increase. Only a net 2 per cent of CFOs reported their companies are carrying higher cash balances compared with a year ago, when a net 23 per cent reported the same last year.
While 75 per cent of CFOs were predominantly concerned with market risk last year, that number has declined to 39 per cent, with strategic, operational and financial risks all becoming a prevalent concern, reflecting the general uncertainty in the environment.
The report shows many CFOs from the region are worried about the political uncertainties. A net 41 per cent of Middle East CFOs feel more optimistic about the prospects for their companies compared with a net 54 per cent recorded 12 months ago.
On their companies’ business-continuity plans, one in four CFOs in the Middle East said they still did not have a plan in place despite the increased instability in the region. Middle East CFOs were also found to favour expansion in their own region over other parts of the world.
“The sample of 156 Middle East respondents to the Q3 2013 Deloitte Middle Eastern CFO Survey expressed decreased optimism from the prior year, due in most part to the ongoing political uncertainties in the region,” elaborated Babb. “Although uncertainty has become a constant companion for many quarters now, the general feeling remains one of mixed optimism”.
In the Mena region, over the next 12 months, CFOs are turning more inward, focusing on organic growth, cost reduction, and increasing cash flows. While many are still seeking strategic alliances, the expectations for M&A have dropped 25 per cent over the prior year. The Mena region is still favoured in terms of geographic expansion over other parts of the world, which is consistent with the previous year. Only 22 per cent of CFOs would consider an IPO at present, compared with 34 per cent a year ago.
More than 60 per cent of CFOs surveyed believe their balance sheets are appropriately leveraged, up from 46 per cent a year ago. CFOs reported the cost and availability of new credit have improved over the past year. Only about 24 per cent of regional CFOs believe that equity markets indexes will increase over the coming 12 month, versus 42 per cent a year ago.
The financial crisis irrevocably changed the investment landscape of the Middle East, with banks now focusing more on streamlined balance sheets; smaller, easier to place deals; slimmer credit cost…
The financial crisis irrevocably changed the investment landscape of the Middle East, with banks now focusing more on streamlined balance sheets; smaller, easier to place deals; slimmer credit costs; and a focus on risk management. Yet despite the more conservative appetite, the high levels of liquidity in the region along with a boom in infrastructure expenditure and a drive towards diversification have kept the Middle East on the map as an investment destination. LAUREN MCAUGHTRY explores what’s hot; what’s not; and what to watch in 2014.
Although the macroeconomic outlook for the Middle East has stabilized, GDP growth is still expected to slow this year – with the IMF expecting an average GCC rate of 3.2% in 2013 compared to 5.7% in 2012. Nevertheless opportunities are still available in a range of asset classes to tempt Shariah compliant investment; and global investors (particularly from Asia) continue to flock to key sectors in the Gulf region.
Real estate resurgence Property has always been a favorite for Islamic investors, and despite the bubble burst of 2009 the region has seen a resurgence in real estate over the year; with a shortfall of supply in key markets including Saudi Arabia, the UAE, Kuwait and Bahrain driving the construction sector and spurring investors to enter the market as the sector seeks to narrow the demand-supply gap with a boom in development. In the UAE in particular, fears of another bubble have risen with house prices increasing by over 20% over the last 12 months, prompting a warning from the IMF. However, new measures imposed by the central bank including limits on mortgage loans and restrictions on bank lending should control growth and prevent another crisis. Measures are now being taken to encourage foreign as well as domestic investment in the sector, with Dubai-based Noor Islamic Bank recently launching mortgages for non-UAE residents in the GCC and G20 to tap growing international interest in regional real estate; with a profit rate of around 5.75%.
The growth is also having an impact on Islamic debt, with region’s leading development companies seeing exceptional returns on their Shariah compliant instruments, prompting new entries to the capital market. In the UAE the yields on Sukuk from Emaar and Nakheel Properties have plummeted in recent months amid surging Dubai property prices; while Abu Dhabi’s Aldar Properties also came to market with a planned US$500 million issuance launched in November at US$750 million following oversubscription of three and a half times with significant interest from Asia and Europe. The funds will be used to refinance the firm’s US$3.08 billion-worth of debt due to mature in 2014, and is part of its new strategy to reduce borrowing costs and extend its maturity profile.
In Saudi Arabia, massive unmet demand (with a US$67 billion program to build 500,000 new homes launched in 2011 and a massive supply-demand gap with a need for over 1.25 million units estimated by 2014) has also boosted the market. The Dar Al Arkan Real Estate Development Co US$450 million Sukuk due February 2015 earned over 7% in 2013 to top the Bloomberg Sukuk league table for the GCC; with Emaar Properties coming second with its 2016 Sukuk returning 5.7% - compared to a GCC average of 2.1%, as of September.
Infrastructure boom While the property market is an old favorite, a new asset class prompting excitement is the infrastructure sector, which has garnered considerable attention due to vast state investment across several Middle East territories. Last year Nasser Saidi, then the chief economist of the Dubai International Financial Center (DIFC), noted that the leading developing oil export economies should commit 11% of their GDP to maintaining and improving their national infrastructure; with transport and energy being the most urgent areas for investment.
GCC countries are seeking to diversify away from a reliance on petrodollars, and as result are looking at significant investment in infrastructure as a means of becoming more efficient and attracting foreign investment inflows. Consultancy firm EC Harris’ Global Infrastructure Investment Index, which ranks 40 countries in terms of attractiveness for infrastructure investment, lists the UAE and Qatar in its top 10 with Saudi Arabia coming in and 11; and the firm predicts that the GCC has the potential to become a leading destination for global infrastructure investment.
Mark Lemmon, CEO of Fajr Capital’s MENA Infrastructure Fund, confirmed in a recent interview with a global finance media source that numerous international developers are currently looking to invest in infrastructure firms and projects in the power and water sectors. In addition a wide range of investors including development agencies, sovereign wealth funds, pension funds and other sources of capital also have an appetite for investment in infrastructure in the GCC, with the strongest demand reportedly coming from Asian investors.
Islamic finance has a key role to play in this development and according Iqbal Khan, CEO of Fajr Capital, the investment firm views infrastructure as a key asset class for 2014. “The uniqueness of Islamic finance, which allows for conventional investors to also participate in its issuance, makes it an inclusive financing option with a broader appeal,” he is quoted as saying. “Syndicated financing and tapping into the Sukuk market are two concrete steps in the path to achieving financial close.”
Project finance push On the same page as infrastructure investment, one of the most exciting new areas for Islamic finance in the Middle East region this year is project finance, which is rapidly becoming a power player – particularly in the Saudi, UAE and Qatar economies, as the governments invest billions of dollars in infrastructure and industry as they prepare for major events such as Qatar’s 2022 World Cup and Dubai’s 2020 World Expo.
Saudi Arabia is already the largest project market in the GCC, driven by significant deal volume (rather than deal quantity) with an average size of around US$3 billion. This has led to a boom in the project finance sector in Saudi Arabia. Ground-breaking innovations in projects such as the Islamically-financed Jabal Omar project in Mecca and the SATORP greenfield Sukuk in 2011 and subsequent SADARA Sukuk in 2013 have opened up new avenues of incremental project debt beyond the traditional bank market, creating a new distribution footprint with public and private investors, corporates, pension and insurance funds.
A major feature of the 2014 investment landscape in the region is thus likely to be the project finance marketplace, as local companies seek new sources of capital to fund new projects and development. “Sectors such as transport need financing. Port companies, railways and airlines are looking to do this either through banks or Sukuk,” Fahad Al Saif, the head of capital markets and corporate finance for HSBC Saudi Arabia told Bloomberg in October. “With a number of companies considering primary or secondary offerings, we are optimistic that there will be a healthy amount of activity next year.”
Sukuk remains strong Of course, Sukuk continues to be the main method of raising funds in the region and a preferred asset class for investment due to favorable market conditions. In a statement issued on the 30th October Steve Drake, the head of PwC’s Middle East capital markets group, commented that: “We see no reason for this trend declining given the continued demand for capital the region is experiencing.”
Although total Sukuk issuance levels have declined slightly from the bumper year of 2012, the sector has sustained an impressive performance with a positive trend in corporates entering the market. Recently Ooredoo Tamweel, the biggest phone operator in Qatar, ended a two-year hiatus of corporate Sukuk in the country with the announcement of its maiden issuance, a benchmark US$1.25 billion five-year Sukuk, following its US$500 million Murahabah financing facility of November 2012. The last corporate Sukuk from Qatar was the US$215 million deal from Almana Group in June 2011 but it is expected that the new issuance will pave the way for more corporates to issue, driving Qatar into competition with the UAE and Saudi Arabia as one of the region’s biggest issuers as it launches over US$138 billion-worth of investment over the next three years.
Regional Sukuk are seeing exceptionally high demand from investors due to their favorable yields and high liquidity levels, with the majority of recent issuances significantly oversubscribed. In October this year the Al Hilal Bank issuance of US$500 million received orders upwards of US$6.3 billion; while the average yield for GCC Sukuk was up by 80bps to 372% as of the end of November, according to the HSBC/Nasdaq Dubai index compared to an 85bps increase to 4.15% for conventional bonds.
Equity market excitement Yet despite the strength of the Islamic debt capital markets, equity investment also looks to be a tempting prospect for Islamic investors in 2014. Despite a traditionally small regional market (the combined GCC exchanges have reportedly traded only around US$2.2 billion so far this year) Islamic funds have put in a strong performance, according to the Thomson Reuters Global Islamic Asset Management Report 2014. The GCC has also enjoyed the highest fund inflows compared to other jurisdictions. Assets under management in Saudi Arabia, the largest funds market in the region, now exceed US$6 billion and account for 20% of the global Islamic funds market. This year in fact saw the highest global number of Shariah compliant fund launches in four years, of which 20% were in Gulf countries. However, the majority of these remain retail-driven, with only 20% of assets coming from institutional investors – primarily due to an absence of major Takaful operators and pension funds in the Islamic asset management space. Institutional participation and the entry of pension providers is therefore a key target for the industry in 2014.
Despite the general caution in the market over the past 12 months and a focus on more conservative investment and greater risk management and credit control, there are still a plethora of opportunities that maintain the Middle East’s status as a leading Islamic investment destination. Going into 2014 we can look forward to sustained growth and continued fund inflows, laying the groundwork for yet another exciting year for Islamic investment.
There are things so unthinkable that they couldn’t possibly happen to your office or shop, right?
But believe it or not, 20 percent of all small businesses go bust during the first twelve months after starting, mostly due to an unforeseen expense or liability that was uninsured.
And in spite of these staggering figures the penetration rate of insurance among start-ups in the Middle East remains extremely low.
The misconception arises from the perceived cost of insurance, which is often considered to be a major and hence unnecessary expense.
The truth, however, is very different, as David Harris of RSA Insurance explains:
With over 230,000 small and medium-sized companies that contribute more than 40 percent to the country’s GDP, SMEs is the fastest growing sector in the UAE; in addition to being the most significant part of the country’s ability to rebound from any global crisis.
With the support of government initiatives, this sector will continue to contribute effectively to the country’s growth.
Needless to say that the SME sector is of great importance to RSA and we ensure that this is reflected through our associations and business practices.
We have been a part of several SME initiatives for the past two years now and the associations are an integral part of RSA’s vision to support the growth of small businesses in the UAE.
Many small businesses think of insurance as a cost rather than a necessity. The contributing factors to this may include the unavailability of suitable products for small businesses that often leaves insurance low on the list of priorities for most entrepreneurs.
Focus on SMEs has been a crucial part of our strategy for a few years now and this will be a key area we hope to continue growing in. Orientation and education on availability, accessibility, viability and importance remain the headlining attributes of our vision.
SMEs come in all shapes and sizes. When a new business is set up a lot of time, energy and resources go into several areas of development. But insurance is one area that normally tends to take a back seat. According to statistics, it only takes one uninsured loss to get a start-up out of business. So insurance for SMEs is key and just as important (if not more) as it is for larger businesses.
And while there is a perception that insurance is expensive, it is really not. The cost to insure a small business is very manageable and can of course be tailored to specific business needs, allowing them to choose from the covers that address a particular worry or high-risk area concerning their nature of business. This could be property, third party liability, or something else.
Business owners should work closely with their insurer or broker to understand the benefits and tailor make what they need that will offer them the right protection and security for the most competitive price in the market.
With a limited workforce (which is usually the case with most SMEs), time is the most precious commodity, and it’s better spent on growing the core business. A cookie-cutter kind of coverage, identical to everyone else’s, might not give the optimum protection a business needs. That is why we have created a comprehensive SME insurance product with covers that can be tailor-made. This comes bundled with ease of administration, prompt and efficient claims services and a great price.
Insurance for Start-ups can now be acquired for as little as AED 4 a day and it is definitely worth every entrepreneur’s while to consider it as part of the cost of setup.
Business activity growth in the UAE’s non-oil private sector accelerated to a record high in November as both output and new orders increased sharply, a purchasing managers’ survey showed on Wednesday.
The HSBC UAE Purchasing Managers’ Index, which measures the performance of both manufacturing and services, rose to 58.1 points in November from 56.3 in the previous month.
The adjusted index remains above the 50-point mark which separates growth from contraction, the survey of 400 private sector firms showed.
"The reading is impressive, but not unexpectedly so," said Liz Martins, senior economist at HSBC. "With the announcement that Dubai will host Expo 2020, and improved sentiment around the geopolitical situation, there is ample reason to believe that the strong performance seen in the UAE in 2013 will continue into 2014."
Dubai is perhaps the best-known of the seven emirates that make up the UAE. It was named host for Expo 2020, a world trade fair, late in November, an event analysts said would lead to a boom in spending on infrastructure.
The PMI report showed saw output growth at UAE firms rebounded to 59.7 points in November, the fastest clip in the survey’s two-and-a-half year history, from 56.4 in October.
New orders were at 66.9, also the highest level since the survey started in August 2009 and well up from 64.6 in October. Growth in new export orders picked up to a record high of 59.3 points from 58.9 points in October, the survey showed.
Employment creation across the UAE’s non-oil private sector rose to a five-month high of 53.6 points from 52.7 in October.
Output price growth fell further, into negative territory, registering 48.7 points in November after 49.0 in October. Input price growth accelerated to 55.3 points, the highest rate in a year and a half, from 54.2 in the previous month.
Consumer price inflation in the UAE, the world’s No. 3 oil exporter, held steady at a two-year high of 1.3 percent on an annual basis in October for the fifth month in a row, government data showed.
When Nouriel Roubini speaks, you would do well to listen carefully.
The 55-year-old American economist was a voice in the wilderness in the run-up to the global financial crisis of 2008 and 2009, predicting a collapse of property prices, banking disasters and economic recession.
When he was introduced at the Global Islamic Economy Summit in Dubai last week, he was billed as “Doctor Doom” for the gloominess of his forecasts, but also as one of the leading economic thinkers of his generation.
So how does he see the world as it heads into 2014? The good news is that, in global terms, there is an uneven but meaningful recovery under way pretty much everywhere.
The bad news is that asset inflation and “frothiness” could create the conditions for another bust.
“Until now, growth in advanced economies has been below trend, but there are some signs of acceleration. But you have to ask how strong is the recovery in advanced economies? Are there still structural problems there?” he says.
“Recovery has been anaemic in the West, around 2 per cent on average and slower in Japan.
“There is still deleveraging going on. The name of the game is monetary stimulus, but this is causing asset inflation, rather than goods inflation or increased employment. We are beginning to see signs of frothiness in global markets again, while equity prices are high and price [to] earnings ratios [a measurement of equity values] above historical averages,” he adds.
The characteristic Roubini “permabear” mentality is still just below the surface. “Quantitative easing leads to a risk of financial instability, and greed in financial markets can still cause bubbles and crashes,” he warns.
But when he turns to the Middle East economies, and to the growing sector of Islamic finance, his tone brightens noticeably.
“There is a need for a more resilient system, and that’s where there is potential for the Islamic system. It is less volatile and potentially more stable than conventional financial systems. The advanced economies can learn from the Islamic system in this respect,” he says.
Mr Roubini has roots in the region. Born in Istanbul to a family of Iranian émigrés, he got his early education in the region and has come back regularly for speaking engagements and field research.
He believes the Middle East has its own special characteristics, but must still be seen against the backdrop of the emerging market economies of Asia, Africa and South America.
“The prospect for emerging economies is still positive, with 5 per cent growth averages compared with 1 [to] 2 per cent over [the] past few years in the rest of the world. There are demographic dividends with young workforces, and the rise of more affluent middle classes. All this adds up to a long-term trend that is putting these countries at the centre of growth in the global economies,” he says.
The Islamic world has its own opportunities and challenges. “The Organisation of Islamic Cooperation [OIC] consists of 57 states, and they are all very different. In the Gulf, they are mostly oil-rich and the priority is to diversify, and the UAE and some other Arabian Gulf countries have been quite successful in that respect. For oil importers such as Egypt and Syria, it is more difficult, but there are other unstable elements in the region, too: Yemen, Iraq, Iran.
“Islamic countries in South East Asia have been quite successful, like Malaysia and Indonesia, and Turkey also is quite dynamic,” he adds.
The challenge lies in how to exploit what Mr Roubini calls “the democratic dividend”. Having a growing young population is a good thing, but they need education, training and jobs, and in this area some fall short, he believes.
And there is still the challenge of diversification away from oil dependence. While some countries have been partially successful, the extent of the problem lies in one statistic, Mr Roubini says. “This encapsulates the problem: excluding oil and gas revenue, the GDP of the Middle East, with 400 million people, is roughly the same as that of Belgium, with around 10 million people.”
The other good news is that he believes Islamic finance and economy can help span the diversification gap. “The halal economy is a real opportunity, but it needs to be more standardised and integrated into global markets,” he says.
Mr Roubini seems uncharacteristically optimistic with regard to Islamic finance, with some key reservations, and the prospects for Dubai to be a centre for the growing industry.
“I’m all in favour of less risk, and some elements of Islamic finance involve profit-sharing and risk-spreading, which is good. There are many things in Islamic finance that can lead to more stability. There is a lot Islamic finance can teach us,” he says.
“I do not see Islamic finance competing with conventional finance, rather it is complementary to it. The main focus will be on the Islamic world, but others will also seek to get involved, like London.
“One of the challenges of the Islamic financial systems is the issue of insolvency. Creditors have a claim over the underlying assets, which is a good thing, but bankruptcy regimes in Islamic countries are not very strong,” he says.
“Dubai at the moment has good prospects. There has been a recovery in the real estate sector. The lifestyle here is less restrictive than in other countries in the region, and there is safety and security. In the longer term, Dubai can be an important financial centre and a key economy of the region. Sometimes you make mistakes, but if you manage growth more cautiously and manage diversification properly, I’m optimistic about Dubai,” he says.
Can the UAE challenge London and Malaysia, the other major global centres for Islamic finance? “I don’t believe Middle East capital is likely to suddenly fly off to Malaysia, and London is barely starting in the Islamic finance business. It could have a role, but I see no situation where London will supplant Dubai or Kuala Lumpur,” Mr Roubini says.
“The other thought is that perhaps there are too many financial centres in the Gulf. There are at least four, which I believe is too many. In the long term, a couple of them might emerge as the leaders, and I think Dubai and Abu Dhabi could do that.”
The Gulf Monetary Council has dismissed media reports claiming a date has been set to launch the single currency for Gulf countries.
Press reports earlier this week suggested that four countries of the Gulf Cooperation Council (GCC) will announce the single currency by end of this year.
It was claimed that Kuwait, Saudi Arabia, Bahrain and Qatar were planning to press ahead with plans without the UAE and Oman.
But in a statement, the Gulf Monetary Council said: “The Monetary Council affirms that the reports by some newspapers and websites over the date of the issuing of the single Gulf currency are completely false, not based on accurate information nor reliable sources.”
The Monetary Council is mandated with placing regulations for the establishment of the Gulf Central Bank and completing the establishment of the Monetary Union.
Leaders of the six GCC countries are set to hold summit talks in Kuwait on December 10-11.
The GCC countries have been discussing a currency union similar to the Eurozone for more than 15 years.
The board of directors of the UAE Central Bank on Sunday reviewed the latest developments regarding the draft financial services law and the actions taken so far in this respect at their seventh meeting for the year 2013.
The meeting was held under the chairmanship of Khalifa Mohammed Al Kindi, chairman of the board, and was attended by Khalid Juma Al Majid, deputy chairman; Sultan bin Nasser Al Suwaidi, the governor, and board members: Younis Haji Al Khoori, Khalid Mohammed Salem Balama, Khalid Ahmed Altayer, Hamad Mubarak Bu Amim, and Mohamed Ali bin Zayed Al Falasi, deputy governor; Saeed Abdullah Al Hamiz, assistant governor for banking supervision; Saif Hadef Al Shamsi, assistant governor for monetary policy and financial stability affairs, and a group of senior Central Bank staff.
The board also reviewed core items in the new banking law and instructed the introduction of some amendments. The board reviewed a report on systemic prudential ratios for the banking system, banking stability, and liquidity indicators of the banking sector. The board also reviewed a report on Central Bank’s reserves management policy, along with a report on the maximum limits for placements, and dealing in foreign currencies with banks and other financial institutions. In addition, the board discussed the communication with the Media Policy Project, which has been developed as per the UAE government’s communication strategy.
The board also reviewed the amended Money Changers Regulation as per the board decisions and approved implementation thereof. The board also reviewed a draft of the Dormant Accounts at Banks and Other Financial Institutions Regulation. This is aimed at protecting the rights of customers of the financial institutions and their legal heirs.
The board also reviewed a report on banking indicators submitted by the assistant governor for banking supervision. It also reviewed applications submitted by banks and other financial institutions operating for extension of their activities.
UAE retailers are not allowed to slap extra fees on credit card or debit card payments, Omar Bu Shahab, CEO of the Commercial Compliance and Consumer Protection Division (CCCP) in the Department of Economic Development in Dubai, told Gulf News.
Bu Shahab was commenting on an announcement made by a private school in Dubai requesting parents to pay two per cent extra fees on credit card or debit card payments for anything related to school fees.
The circular said: “We write to inform you of a change regarding payment methods at Our Own High School, Al Warqa’a Dubai, UAE. With effect from November 1, 2013 any and all payments made by credit card or debit card at the school or online will be subjected to a two per cent processing fee.”
“Retailers who are charging extra fees on the credit card or debt card payments are violating the consumer protection law and will be subject to penalties,” he said.
The Supreme Committee of Consumer Protection in the UAE has issued certain regulations banning all retailers across the emirates from charging extra fees on bank debit cards.
While the school justified this regulation by saying that this will be charged by the bank to process all payments made by credit card or debit card, Bu Shahab said that these fees go to the retailers and not to the bank.
“In this case the school is violating the rules,” he said.
Bu Shahab added: “The card processing payment should be offered as a free service across all UAE retailers and slapping an extra two per cent charge is illegal.”
He called upon consumers to submit a formal complaint at the department as they can take quick action by sending notice to the retailer, imposing heavy fines and it could even end with the closure of the outlet.
The school also provides other choices to the parents who do not wish to pay the two per cent processing fee. They can choose other payment methods such as cash, cheque or the GEMS NBAD Co-branded card, the school said.