UAE banking experts clarify account deduction regulations for overdue payments
According to two banking experts, financial institutions have the authority to offset a customer's overdue payments from various installments against other accounts held by the same customer within the same bank.
This practice is in line with agreements signed during the financing process or aligns with the policies of some banks that treat the customer's diverse accounts as a unified entity. The deduction is typically made from the customer's primary account to settle outstanding obligations.
This applies not only to individual accounts but also to corporate accounts. Responding to complaints from customers who experienced deductions from their savings accounts without prior notice, the experts clarified that some banks include a clause in the contract allowing them to access a customer's other accounts and offset overdue payments if the primary account lacks sufficient funds. Customers may not be explicitly informed of this policy during the financing agreement.
Awatif Al-Harmoudi, a banking expert, emphasised the importance of customers being aware of the terms in the contract to avoid surprises later. If customers sign an agreement permitting banks to deduct overdue amounts from any account without prior notification, the banks have the right to proceed accordingly.
Certain banks treat all customer accounts, regardless of their diversity, as a unified number, facilitating direct transfers between them to settle installments and arrears. This condition is outlined in the account opening agreement and is applicable to both individuals and companies.
Ahmed Fahmy, another banking expert, stressed the need for customers to carefully read the terms of the agreement when opening an account or obtaining a loan, credit card, or financing for a purchase. Most banks include a clause allowing them to collect overdue amounts from sub-accounts associated with the main account, treating the various accounts of an individual or company as a consolidated entity.
Fahmy advised customers, whether individuals or companies, to ensure the availability of funds in their main accounts before the due date to prevent deductions from other accounts. As the agreement is signed before obtaining financing, banks are not obligated to inform customers before accessing other accounts in the event of payment delays. The signed clause permits the implementation of such actions without obtaining the customer's approval or providing prior notice.