Interest rates cap for bank loans being considered by FNC

Central Bank is to put FNC recommendations to lower interest rates to heads of UAE banks.

Sultan Al Suwaidi, the UAE Central Bank Governor, addresses members at the FNC session.

FNC members failed to agree on whether to recommend a 4 per cent cap on interest rates for bank loans.

Mohammed Al Qubaisi (Abu Dhabi) asked Sultan Al Suwaidi, the Governor of the UAE Central Bank, to find a way of capping all interest rates in the country's banks.

Mr Al Qubaisi said banks could afford to reduce their rates but chose not to: "Banks make a lot of profit from us locals."

Mr Al Suwaidi called on banks to charge more realistic interest, but said he could not interfere directly.

He said, however, that he would put any FNC recommendation to the heads of UAE banks, with whom he is soon to meet.

Mr Al Qubaisi suggested rates should be capped at 4 per cent but several members felt it was not that simple, suggesting the recommendation be reworded by the finance committee.

But Mr Al Qubaisi protested, as did Dr Amal Al Qubaisi (Abu Dhabi).

"All Emiratis are waiting for the work of the FNC," said Dr Al Qubaisi. "We told him [the Governor] we would issue a recommendation.

"We cannot push this to the end of the parliamentary break [in October]. Emiratis are waiting for this."

The council agreed to refer the issue to a temporary, four-member committee to come up with a recommendation for the next session.