Bahrain's central bank bans freezing of accounts after job loss

The directive said banks must make customer accounts accessible even if there is a finance arrangement in place ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​

The Bahrain Central Bank said the directive was issued to ensure “sound and fair banking practices" in the country. Getty

The Central Bank of Bahrain banned lenders from freezing accounts of customers who have either lost their jobs or retired from employment, as regulators across the globe consider measures to mitigate the economic impact of the coronavirus.

The CBB gave the order on Monday instructing banks to keep accounts accessible following redundancy or retirement even if the customer has a credit facility such as a loan or credit card with a lender.

"The CBB issued a directive dated March 8, 2020, prohibiting such practice by retail banks, regardless of whether or not contractually the bank has the right to take such action," according to a statement posted by the CBB on its website.

The regulator said the directive was issued to ensure "sound and fair banking practices" by taking the best interests of customers into consideration.

The CBB's move comes a week after the Central Bank of the UAE asked banks to review their business continuity plans as it established a committee to assess and identify solutions to offset the effects of the virus on the UAE economy.

Financial institutions are expected to implement measures such as the "rescheduling loans contracts, granting temporary deferrals on monthly loan payments as well as reducing fees and commissions" for customers affected by the virus, the Central Bank said at the end of last month.

UAE banks remain well-capitalised and are in a good position to support customers affected, without "jeopardising their own safety and soundness", the regulator said.

On Saturday, the G20, a group of finance ministers and central bank governors from the world's largest 20 economies, pledged "to take further actions" to support the global economy amid fears the outbreak is hampering growth.

The G20 said it was ready to introduce fiscal and monetary measures to bolster the response to the virus, as ratings agency Moody's Investors Service revised its growth forecasts for all G20 economies amid the health crisis.