Back Custom print Link Text Only Rich Text Print

  • BC-3 BC-3 Customer Account Services and Charges

    • BC-3.1 BC-3.1 Disclosure of Charges by Licensees

      • BC-3.1.1

        In order to improve customer awareness and enhance transparency of licensees' charging structures, all licensees must display in a prominent position, in Arabic and in English, by notice in their banking halls (both head offices and branches), a list of all applicable charges.

        January 2014

      • BC-3.1.2

        Licensees must also ensure that each customer is in receipt of their current list of charges, by enclosing such a list with statements and displaying such charges on their websites. The list must specify standard charges and commissions that will be applied by the licensee to individual services and transactions and to specific areas of business.

        January 2014

      • Credit Agreements

        • BC-3.1.3

          A licensee must make available, at their premises, information leaflets containing information on the key products and services in respect of all credit agreements including:

          (a) The Annual Percentage Rate (APR) as defined in BC-3.1.10, for instalment financing facilities only; and
          (b) The annual profit/interest rate on credit facilities (as referred to in paragraph BC-3.1.14), commission, fees, one-off charges, expenses on behalf of third parties, exchange rates applied and any other charges.
          January 2014

        • BC-3.1.4

          For the purpose of this Section, the following definitions apply:

          (a) Credit agreement — Means all instalment financing agreements and lease agreements, as well as credit cards, revolving and other types of credit offered to customers;
          (b) Customer — Means both the debtor and the guarantor (if any) and/or any potential debtor or guarantor;
          (c) Conspicuous notice — Means a written statement in both Arabic and English languages which is easily visible and legible and displayed in all licensees' premises open to the public (head offices and branches), and via means such as websites, newspapers and other press notices;
          (d) Nominal annual rate — Means the interest rate charged to the customer, calculated by dividing the amount of the total interest by the amount of the funds provided to the customer and excluding any other charges, the results of which is divided by the number of years of the term of the credit agreement;
          (e) Outstanding credit amount — Means the amount outstanding under a credit agreement representing the amount of funds provided to the customer and any other charges that are included as part of the principal amount to be repaid by the customer over the duration of the agreement less any repayment made related to the principal amount at a specified date; and
          (f) Principal — Means the amount of credit received plus any other charges, the total of which is subject to interest.
          January 2014

      • General Rules

        • BC-3.1.5

          Where a customer has a credit agreement with a licensee, licensees must:

          (a) Duly inform their customers in accordance with this Module about the nature and the characteristics (including relevant risks) of the credit agreements and services offered by them, and about the terms and conditions governing such agreements;
          (b) Periodically inform, in writing, their customers on the evolution and the terms of any credit agreement signed, throughout the duration of the contract (refer to Paragraphs BC-3.1.24 and BC-3.1.25);
          (c) Respond in due time, to customers' requests for the provision of information and clarifications regarding the application of contractual terms (refer to Paragraphs BC-3.1.29 and BC-3.1.30);
          (d) Appoint a customer complaints officer and publicise his/ her contact details (refer to Chapter BC-4 on Customer Complaints Procedures);
          (e) Ensure the proper training of employees involved in interfacing and providing specific information to customers;
          (f) Disclose information required in this Module in the credit agreement in both Arabic & English languages;
          (g) Show clearly the APR for instalment facilities and the annual rate of interest for other credit facilities on the credit agreement application and 'key terms disclosure' document; and
          (h) Disclose all information in a clear and readable form (refer to Paragraph BC-3.1.6).
          January 2014

        • BC-3.1.6

          Marketing of customer credit agreements, advertising and sales promoting credit agreements, irrespective of the media used (SMS, Internet, printed material, telephone solicitation) must be clear and understandable, must be true and not misleading and meet the basic customer information requirements as defined in this Module. Licensees are also asked to take special care to ensure that the content of any advertising material does not mislead or deceive the public in any way.

          Amended: July 2021
          January 2014

        • BC-3.1.7

          The use of "small print" to make potentially important information less visible is not compatible with good business conduct, and should be avoided.

          January 2014

      • Minimum Disclosure Requirements

        • BC-3.1.8

          Licensees must make:

          (a) Public disclosure regarding credit agreements; and
          (b) Disclosures to individual customer(s), whether these be during the course of the initial negotiation of the credit agreement or during the term of the facility being offered.
          January 2014

      • Public Disclosure Requirements for all Credit agreements

        • BC-3.1.9

          The following public disclosures must be made by conspicuous notice for all types of credit agreements:

          (a) Any late payment charges;
          (b) The level of fees for any special services rendered, or one-off expenses, as well as any amount collected by licensees on behalf of third parties;
          (c) Any fees or charges payable under any linked or mandatory contract entered into as a condition for the granting of the credit agreement, such as payment protection insurance; and
          (d) Any other charges not included above.
          January 2014

      • Additional Public Disclosure for Instalment Financing Facilities

        • BC-3.1.10

          In addition to the requirements under Paragraph BC-3.1.9, licensees must publicly disclose by conspicuous notice for instalment financing facilities:

          (a) The current Annual Percentage Rate (APR) as calculated using the APR methodology in BC-3.1.31. The APR displayed must be calculated based on the following scenarios. In case of consumer finance, amount borrowed is BD10,000 for a 7-year term and for housing facilities, BD100,000 for 25 years;
          (b) The Annual Percentage Rate (APR), must be broken down as follows:
          (i) The annual nominal interest/profit rate payable on the instalment financing;
          (ii) Administration/handling fees;
          (iii) In the case of finance lease contracts/ijara or deferred purchase contracts, any fees for purchasing the asset; and
          (iv) Any other mandatory charges (contingent costs are excluded); and
          (c) The terms and conditions for early repayment, partial or full, of the credit agreement, or for any change in the terms and covenants of the credit agreement, as well as any relevant charges (where permitted) and the way in which these are calculated.
          January 2014

        • BC-3.1.11

          The APR is a standard measure that allows customers to compare total charges for instalment financing facilities on a like-for-like basis. The APR allows the customer to compare the total charge for credit over differing periods (e.g. — two versus three years) or offered by different licensees with differing payment profiles and taking into account the payment of any other fees payable as a condition of the contract, such as administration fees or insurance premiums.

          January 2014

        • BC-3.1.12

          Any advertising through any media means of instalment financing facilities, offered by the licensees must specify only the APR (including all fees and charges) and no other rates, i.e. nominal, base, flat or rates by any other names.

          January 2014

        • BC-3.1.13

          For the purposes of Paragraph BC-3.1.10, the disclosures can be provided as one APR or a range of APRs for licensees that provide instalment financing to different segments and products. A licensee may have different customer segments with different risk profiles, for whom the APR offered on the same product may vary. However, the disclosures must comply with the scenarios outlined in Subparagraph BC-3.1.10 (a).

          January 2014

      • Additional Public Disclosure for Credit Agreements other than Instalment Financing Facilities

        • BC-3.1.14

          In addition to the requirements under paragraph BC-3.1.9, licensees must publicly disclose by conspicuous notice for Credit Agreements other than instalment financing facilities:

          (a) For credit cards, the monthly and the annual rate of profit/interest plus other fees and charges;
          (b) For floating-rate credit agreements, the profit/interest rate clearly defined on the basis of the relevant base rate, the periods during which this rate would apply, as well as information on key factors that could affect the total cost of the credit agreement; and
          (c) For instances where the customer exceeds contractual credit lines, the terms and any relevant charges.
          January 2014

        • BC-3.1.15

          For credit agreements other than instalment financing facilities, any advertising through any media means must specify only the annual proft/interest rate and other fees and charges.

          January 2014

        • BC-3.1.16

          For credit agreements other than instalment financing facilities, licensees are prohibited from using the term APR in any advertising.

          January 2014

      • Disclosure to Individual Customers: Initial Disclosure Requirements of Key Terms

        • BC-3.1.17

          Licensees must make clear to potential customers, prior to entering into a credit agreement, all relevant key terms of the agreement in the credit application and 'key terms disclosure' document, in order for them to clearly understand the characteristics of the services and products on offer. Licensees must also comply with the disclosure requirements under the "Code of Best Practice on Consumer Credit and Charging" (see Appendix CM-1).

          January 2014

        • BC-3.1.18

          The above "key terms disclosure" document must be summarised in plain English and Arabic. This document must be signed and dated by the customer(s) in duplicate as having been read and understood, prior to signing a credit agreement. One copy should be retained by the customer and the other must be retained by the licensee in their customer file.

          January 2014

        • BC-3.1.19

          For credit agreements where a retailer extends credit to purchase goods or services by operating in agreement with licensees, all conditions of the credit agreement must be disclosed in the credit agreement application and 'key terms disclosure' document, including when interest will begin to accrue, along with information on any indirect charges.

          January 2014

        • BC-3.1.20

          Credit agreements, referred to in Paragraph BC-3.1.19, must be finalised with an employee of the licensee, whether located at the premises of the retailer or at the premises of the licensee providing the credit. Profit/interest must in no event be charged before the disbursement of funds.

          January 2014

        • BC-3.1.21

          Licensees must inform the customers on the nature of their contractual relationship with the retail outlet and the customers' rights arising as a result of this relationship.

          January 2014

        • BC-3.1.22

          In addition to the initial disclosure of key terms noted in Paragraphs BC-3.1.17 to BC-3.1.21, the "key terms disclosure" document must, at the time of signing the credit agreement, amongst other things, make clear:

          (a) The detailed breakdown of the payments:
          (i) The principal amount being borrowed, the profit/interest per month and the maturity of the credit agreement;
          (ii) The net amount provided to the customer after deducting or applying any upfront or other charges;
          (iii) The total profit/interest payments and principal repayment for the term of the credit agreement; and
          (iv) The total administration/handling fees and all details of any other fees and charges spread over the term of the credit agreement;
          (b) The APR and annual nominal rate as defined in Paragraphs BC-3.1.10 and BC-3.1.4(d) respectively;
          (c) Whether the rate of profit/interest is fixed or can be varied, and under what circumstances;
          (d) The basis on which profit/interest is charged (e.g. actual reducing balance) and applied to the account (e.g. monthly or quarterly compounding) and whether principal repayments are taken into account in the calculation, together with an illustration of the calculation method;
          (e) The detailed costs associated with "top-ups" of credit agreements or other alternative arrangements for extending additional credit or early repayments, whether partial or full, of amounts due including the treatment of remaining profit/interest and the payment of premium for insurance;
          (f) Any late payment charges;
          (g) The annual profit/interest rate and credit limit being offered for credit agreements such as credit cards; and
          (h) Any other charges related to the credit agreement not included above all details of which must be provided to the customer.
          Amended: January 2019
          January 2014

        • BC-3.1.23

          Licensees are free to design the layout and wording to be used in their 'key terms disclosure' document, as they see fit, providing they contain the information specified in Paragraph BC-3.1.22. The CBB will monitor compliance with the spirit as well as the letter of the requirements in this Chapter.

          January 2014

      • Disclosure to Individual Customers: During the Term of the Credit Agreement

        • BC-3.1.24

          Licensees must, at the time of singing the credit agreement, give the clients information on the payment schedule of the credit agreement, including the breakdown of principal, profit/interest and other charges per month for the whole life of the facility. Information must be given, free of charge, at least on a semi-annual basis, unless the period of debt servicing is shorter or where there exists a prior agreement on a more frequent basis.

          Amended: January 2019
          January 2014

        • BC-3.1.25

          In addition to the requirements under Paragraph BC-3.1.24, when credit is granted through credit cards, monthly statements must be provided and include information on minimum payment.

          January 2014

        • BC-3.1.25A

          Licensees must, when billing their customers, reflect the card transactions without rounding off the amounts in Fils. Licensees must collaborate with acquirers and Visa/MasterCard network schemes to ensure that there is no rounding off in any transaction irrespective of the currency of the transaction.

          Added: January 2019

      • Variation Disclosures Requirements

        • BC-3.1.26

          Licensees must disclose to the customer in advance, either collectively or individually, all relevant changes or variations to a credit agreement. The circumstances in which a customer must be provided with variation disclosures are:

          (a) If both the licensee and customer agree to change the credit agreement; in this case, the customer must be provided in writing with full particulars of the change, at least seven calendar days before it takes effect; and
          (b) If the credit agreement gives the licensee power to vary fees or charges, the amount or timing of payments, the profit/interest rate or the way profit/interest is calculated, and the licensee decides to exercise that power, the customer must be provided with full particulars of the change, including an updated schedule of the total interest payments and principal repayment for the remaining term of the credit agreement, at least thirty calendar days prior to the date the change takes effect. Such notice is to enable the customer to decide whether to accept the new terms or terminate the agreement by settling the outstanding credit amount, in accordance with relevant provisions therein, which must have been stated in a clear and understandable manner.
          January 2014

        • BC-3.1.27

          Any increase of the profit/interest rate or the amount of any fee or charge payable under a credit agreement, must be disclosed publicly, by conspicuous notice, at least thirty calendar days prior to the date the change takes effect by:

          (a) Displaying the information prominently at the licensee's place of business; and
          (b) Posting the information on the licensee's website.
          January 2014

        • BC-3.1.28

          Any deferral of profit/interest or principal announced by the licensee must also take account of the APR methodology as shown in Paragraphs BC-3.1.31 to BC-3.1.33, and the new APR must be given to the client or made public in advertisements.

          January 2014

      • Early Repayment

        • BC-3.1.28A

          All requests for early repayment of Shari'a compliant financing must satisfy the condition requiring the licensees to restrict the profit on the transaction to one month profit; i.e. the month in which the actual early repayment takes place. This is effective from 1st October 2011.

          Added: July 2018

      • Request Disclosure

        • BC-3.1.29

          The licensee must provide a reply to any request for disclosure within fifteen business days of receiving the request.

          January 2014

        • BC-3.1.30

          Disclosures requested by the customer may include but are not limited to any or all of the following information about a credit agreement:

          (a) The effect of part prepayment on the customer's obligations;
          (b) Full particulars of any changes to the agreement since it was made;
          (c) The amount of any fee payable on part prepayment and how the fee will be calculated;
          (d) The amount required for full prepayment on a specified date and how the amount will be calculated;
          (e) The outstanding credit amount, including any outstanding profit/interest charge (calculated at the date the disclosure statement is prepared);
          (f) The amount of payments made or to be made or the method of calculating the amount of those payments;
          (g) The number of payments made or to be made (if ascertainable);
          (h) How often payments are to be made;
          (i) The total amount of payments to be made under the agreement, if ascertainable; and
          (j) A copy of any disclosure statement that was or should have been provided before the request was made.
          January 2014

        • BC-3.1.31

          The APR must be calculated using the following methodology:

          K=m K'=m'
          Σ   Ak
          (1 + i) tk =             		Σ   A'k'
          (1 + i) tk'  
          K=1 K'=1
          January 2014

        • BC-3.1.32

          The meaning of letters and symbols used in the above formula are:

          K is the number identifying a particular advance of credit;
          K' is the number identifying a particular instalment;
          Ak is the amount of advance K;
          A'k' is the amount of instalment K;
          Σ represents the sum of all the terms indicated;
          m is the number of advances of credit;
          m' is the total number of instalments;
          tk is the interval, expressed in years between the relevant date and the date of advance K;
          tk' is the interval expressed in years between the relevant date and the date of instalment K';
          i is the APR, expressed as a decimal.
          January 2014

        • BC-3.1.33

          For the purpose of this Chapter, the 'relevant date' is the earliest identifiable date on which the borrower is able to acquire anything which is the subject of the agreement (e.g. delivery of goods), or otherwise the 'relevant date' is the date on which the credit agreement is made.

          January 2014

    • BC-3.2 BC-3.2 Notification to the CBB on Introduction of New or Expanded Customer Products and Facilities

      • BC-3.2.1

        All licensees are required to notify the CBB before the introduction of any new products or services or any changes in existing product/service that will have an additional financial cost to the customers. The CBB will respond to the concerned licensee within one week of receipt of the notification if it has any observations on the new application.

        Amended: July 2023
        January 2014

    • BC-3.3 BC-3.3 Dealing with Inheritance Claims

      • BC-3.3.1

        Licensees must ensure that no transfer of legal ownership of financial assets is made until they have sight of documentation (which must be duly copied for their records) from the Ministry of Justice and Islamic Affairs confirming the entitlement of a person or persons to inherit from the deceased. Such documentation must be complied with precisely. Particular care must be taken where minors (children) or other people lacking full legal capacity are named as inheritors.

        January 2014

      • BC-3.3.2

        Without prejudice to Paragraph BC-3.3.1, financial assets may be distributed to the order of an individual provided that individual is named in a mandate, duly certified by the Ministry of Justice and Islamic Affairs, as having the permission to act on behalf of all of the inheritors.

        January 2014

    • BC-3.4 BC-3.4 Compliance with the Code of Best Practice on Consumer Credit and Charging

      • BC-3.4.1

        Licensees must comply with the Code of Best Practice on Consumer Credit and Charging as included in Appendix CM-1 throughout the lifetime of their relationship with a customer.

        January 2014

      • BC-3.4.2

        Licensees must take responsibility for compliance with the above requirements by all persons carrying out regulated financing company services on their behalf. Licensees must put in place appropriate measures across all their business operations and distribution channels to ensure compliance with the requirements of the Code of Best Practice on Consumer Credit and Charging where relevant.

        January 2014

    • BC-3.5 BC-3.5 Credit Check Reports

      • BC-3.5.1

        Where a pensioner has been requested to produce a credit report by the Social Insurance Organization (SIO) to establish his/her credit standing, licensees must not levy any administrative charges.

        Added: October 2015

    • BC-3.6 BC-3.6 Transaction Advice

      • BC-3.6.1

        All licensees must provide at no charge, a transaction advice service for its customers. This service information must be communicated on all credit card transactions through short message service (SMS) for all types of local and international financial transactions, including POS, ATM and internet.

    • BC-3.7 BC-3.7 Fees and Charges for Services Provided to Individuals

      • BC-3.7.1

        Financing company licensees must comply with the caps on fees and charges for standard services provided to individuals effective from 1st May 2018 as per the table in Appendix BC-2 in Part B of the CBB Rulebook Volume 5 for Financing Companies.

        Added: April 2018

    • BC-3.8 BC-3.8 Interest on Credit Card Transactions

      • BC-3.8.1

        Financing company licensees must comply with the following requirements with regards to charging interest on credit card statement dues:

        (a) Interest must not be charged if the customer pays the full amount billed and due before or on the due date specified in the monthly credit card statement except for cash withdrawal transactions;
        (b) Interest must not be charged on partial payments made by the customer on or before the due date specified in the monthly credit card statement against credit card amount billed and due;
        (c) Interest on cash withdrawal transactions must be computed from the date of the transaction ("transaction date");
        (d) Interest on credit card amounts billed but unpaid on or before the due date must be computed from the posting date of the transaction; and
        (e) Interest must not be charged on outstanding interest amounts, fees and charges due from the customer.
        Added: July 2019

      • BC-3.8.2

        For the purpose of charging interest on credit card dues, financing company licensees must only calculate interest charges using 365-days a year basis.

        Added: July 2019

    • BC-3.9 BC-3.9 Fund Transfers by Customers of Payment Service Providers (PSP)

      • BC-3.9.1

        Financing company licensees that act as acquirers or payment gateways for PSPs, must not charge more than 100 fils in line with the Electronic Fund Transfer System (EFTS) requirements to the customers of PSPs for normal fund transfers made electronically.

        Added: October 2020

    • BC-3.10 BC-3.10 Merchant Fees on Payments to Zakat and Charity Fund

      • BC-3.10.1

        Financing company licensees that act as acquirers must exempt the Zakat and Charity Fund (“the Fund”) of the Ministry of Justice, Islamic Affairs and Awqaf from merchant fees for payments made to the Fund.

        Added: April 2021