KHALEEJ TIMES, Monday, Apr 5, 2021 | Shaaban 22, 1442
Central Bank of UAE issues regulations on the conduct of SMEs
Emirates:
The Central Bank of UAE (CBUAE) on Sunday issued a regulation for small
to medium-sized enterprises (SMEs) to promote best practices among licenced
financial institutions (LFIs) when engaging with SMEs.
The purpose of the regulation is to improve SMEs’ access to financial products
and services. The central bank's launch of this regulation follows the launch of
its new regulatory framework for financial consumer protection.
The regulation seeks to promote a culture within LFIs of dealing with SMEs by
defining their obligations when dealing with SME customers. These include
setting standards of business and market conduct by LFIs; strengthening the
governance and oversight over the design, promotion and sale of financial
products and/or services; and promoting responsible financing practices.
“SMEs play an important role in the UAE’s economy. The UAE government has placed
great emphasis on developing the SME ecosystem and removing obstacles to a
transparent, enterprising and innovative SME sector in the UAE, which has good
access to various financial resources,” said Abdulhamid M. Saeed Alahmadi,
governor of the Central Bank of the UAE, said.
“The Central Bank of the UAE aims to ensure that SMEs enjoy the highest business
standard when interacting with licensed financial institutions, in line with our
new consumer protection mandate. We are confident that this regulation will
facilitate the provision of best-in-class products and services to SMEs,” said
Alahmadi.
The regulation promotes the CBUAE regulatory agenda by setting standards for
market behavior of LFIs; strengthen management over the design, promotion and
sale of financial products and services, and promote responsible financing
practices and appropriate disclosure of risks. In addition, it provides SMEs
with access to timely and accurate information to make informed decisions,
implements clear mechanisms for correcting complaints by SMEs and requires
appropriate debt counselling.
LFIs must ensure that the opening of a bank account for a SME must be completed
within three working days, provided that LFIs undertake the necessary due
diligence related to the enforcement of financial crimes and that SMEs have a
low risk of money laundering or terrorist financing.
The regulation also requires LFIs to establish an independent and effective
complaints management function to ensure fairness, transparency and neutrality
in the resolution of complaints.
The objective of the regulation is to enhance SMEs’ access to financial products
and services. The central bank’s introduction of this regulation follows the
launch of its new Financial Consumer Protection Regulatory Framework.
“SMEs play a vital role in the UAE’s economy. The UAE government has placed
considerable emphasis on developing the SME ecosystem and removing obstacles for
a transparent, entrepreneurial, and innovative SME sector in the UAE, which has
good access to various financial sources,” said Alahmadi.
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