The UAE central bank has announced the introduction of the ‘direct debit system’ in the UAE from June 15, 2013, which will allow customers to make automatic payments from their bank accounts towards loans or credit card payments.
The facility will eliminate the requirement to sign several post-dated cheques for installments upon obtaining a loan, the regulator said in a statement.
The move will allow banks to reduce their reliance on post-dated cheques and help account holders plan their expenses more efficiently, it stated.
The central bank will launch the service with all the banks and finance companies across the UAE.
“The introduction of the direct debit system is a step towards increasing the efficiency of our banking system,” it said.
“Given our focus as a regulator we believe it is necessary to have a prudent, stronger and stable economy. Our current intention is to establish a more convenient retail banking system that will create more stable and progressive economic development.”
The statement also added that the federal government strategy requires banks in the region to adopt technology to enhance electronic systems and improve services to customers.
The UAE central bank has been introducing a number of new rules in the past few years to better regulate the country’s financial sector, including caps on mortgage lending, restricted lending to government-related entities and minimum liquidity requirements.
Also read: UAE Central Bank’s Timeline Of Amendments