Other BriefingsUAE Central Bank Calls on Lenders to Extend Loan Repayment Following Unstable Weather Conditions
UAE directs banks and insurers to allow a six-month deferral on their loan repayment for customers affected by unstable weather. The UAE has been experiencing the heaviest rainfall in 75 years.
By Melissa Cyrill
Deferral of loan repayment allowed for six months
The UAE’s Central Bank (CBUAE) has issued a directive to all banks and insurance firms, permitting the postponement of personal and car loan repayments for six months for customers affected by recent adverse weather conditions. This deferral will not entail extra charges, interest, or principal amount increases.
Customers will not incur any additional fees, interest or profit charges, nor an increase in the principal amount of the loan: UAE Central Bank
Furthermore, the CBUAE clarified that damage to vehicles resulting from the recent heavy rains would be covered by comprehensive insurance (i.e. an insurance policy against loss and damage). Insurance companies are obligated to compensate for these losses.
The same principle extends to damaged homes; property owners with insurance coverage are entitled to repair their properties due to recent weather-related damages.
Insurance companies will be responsible for indemnification.
To safeguard their insurance rights, the public is urged by the Central Bank to thoroughly understand their insurance policies and to reach out to Sanadak, the financial and insurance ombudsman, in case of complaints or disputes with UAE insurance providers.
Sanadak’s services were launched in March, aimed at easing the legal burden on consumers by providing an alternative to resorting to court claims.
The first legally established independent Ombudsman Unit in the UAE and the Middle East and North Africa (MENA) region – Sanadak – was launched by the Central Bank of the UAE on March 7, 2024, for consumers of financial institutions and licensed insurance companies.
Its launch is aligned with the Emirates’ leadership’s directive to improve government services, and in accordance with CBUAE regulations.
Sanadak will prioritize consumer rights protection and the resolution of complaints stemming from interactions with financial institutions and licensed insurance companies. It assumes all consumer complaint-handling responsibilities previously managed by the Central Bank of the UAE’s Consumer Protection Department and Insurance Dispute Resolution Committee. Additionally, Sanadak will operate with 100 percent management and staff comprising UAE nationals.
Unprecedented rainfall in the UAE
The latest initiatives from the Central Bank coincide with the UAE’s recent unprecedented rainfall, marking a historic event since data collection began 1949.
During this extended period of record rainfall in the UAE, homes and roads bore the brunt of flooding, leaving partially submerged vehicles abandoned on motorways, and disrupting air travel with cancellations, delays, and diversions.
Data from the National Centre of Meteorology for last week – spanning April 14-17 – revealed staggering figures. Further, one area in Al Ain experienced 254mm of rainfall over a 24-hour period – an amount equivalent to approximately two years’ worth of average rainfall in the UAE.
The incessant downpour were an “exceptional event in the UAE’s climate history since the start of recording climate data”, noted the National Centre of Meteorology.
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