Banks communicate “digitally” with employers to verify the salary certificate

Bankers said that the current technical infrastructure in the UAE allowed changing the usual methods of knowing the data of bank customers at their employers, the most important of which is the salary certificate on which the value of the personal loan or financing available to the customer is determined, as well as the value of the monthly deduction, and the shift to “digital access” to this data and information, through direct linking with employers, or adopting the “barcode” symbol currently used to receive the salary certificate of the customer requesting financing.

They explained to “Emirates Today” that banks are currently verifying “digitally” all information related to the customer, at a time when traditional manual transactions have been stopped, whether in bringing the salary certificate, or what shows the value of the allowances that can be added to the salary, or the clearance certificate.

They confirmed that the credit inquiry about the customer is obligatory by the Central Bank, for all banks, before approving any required financing, pointing out that there were negative practices in the past, which created a group of customers who actually received financing exceeding 20 times their salary, which led to an increase in the monthly deduction from their salaries to 50%, and thus the matter developed into setbacks and court cases.

It is noteworthy that several cases published by “Emirates Today”, recently, revealed that banks granted financing to customers in excess of 20 times the salary, which led to these banks losing cases and amounts of financing, as a result of uncertainty about the customer’s creditworthiness and ability to repay, and granting him more financing than he deserves, in violation of the applicable regulations and laws.

Digital channels

In details, banker Tamer Abu Bakr told Emirates Today: “Banks currently rely on digital channels to access the customer’s information, whether his identification papers, the salary certificate, or the values ​​of the allowances he receives and are paid from his monthly income, in addition to the clearance certificate in the event his bank account is transferred from one bank to another.”

Abu Bakr presented the mechanism for verifying the customer’s data previously and at the present time, saying: “In the past, the customer would bring the salary certificate himself, or via his personal email, as well as what proves that he received financial allowances, whether for housing or education. However, currently, the banks themselves verify the authenticity of these documents by communicating directly with employers, adopting a barcode, or linking with major companies and entities, in order to facilitate access to the customer’s data directly, and ensure its accuracy.”

Abu Bakr continued: “Banks are obligated to conduct credit inquiries, in accordance with the instructions of the Central Bank of the Emirates, before approving financing requests, but there are negative practices that occurred in the past, which led to the emergence of financing exceeding 20 times the salary, which resulted in a deduction of more than 50% of the salary, and thus financial stumbles occurred for the customers who obtained all the financing, and they developed into court cases.”

Additional income

For his part, a banker, who preferred to remain anonymous, said: “In the past, allowances for housing contracts were approved as additional income for the customer, and thus the value of the permitted financing increased. The same applies to education allowances or travel tickets, and other allowances that some banks did not adequately scrutinize, which led to providing financing that exceeded the permissible amount, and thus defaults and issues emerged that the banks eventually lost, because they granted the customer financing that exceeded his ability to repay.”

He added: “Banks currently require that housing allowances, education allowances, travel tickets, or any other allowances appear in the customer’s bank account statements, and any manual documents prepared by the customer himself regarding these allowances are never taken into account, even if the customer’s entities pay directly to the owner of the property he is renting from, then an account statement is requested for the owner, showing that he received the rent value in his bank account,” stressing that this method has completely stopped any manipulations in this item.

The banker stressed that the technical infrastructure in the UAE, especially in the banking sector, allows easy access to all information in a purely digital way, away from traditional manual practices, and the negatives they contain. Therefore, banks have now completely verified the validity of the data and obtained documents themselves through direct communication between banks, through official platforms, or linking with employers, and adopting the “barcode” symbol, and soon “QR”, and other means that regulate the granting of financing to the customer, to approve his ability to pay.

He continued: “Unfortunately, several cases have appeared in banks providing financing in excess of the permissible limit, as a result of negative practices that occurred in the past, which prompted all banks to rely on digital solutions, and take advantage of available technologies, to prevent the recurrence of such cases.”

The “digital” customer

In the same context, banking expert Awatef Al Harmoudi said: “UAE banks have technologies that help them complete all transactions digitally, especially with regard to accurate access to the customer’s information and documents with the support of government platforms and the official Central Bank platform.”

Al Harmoudi added to Emirates Today: “Banks currently have a complete digital picture of the customer, starting from his identification papers, to bank account statements, or salary certificates,” stressing that banks exchange information among themselves, in addition to credit inquiries with the customer’s approval, in addition to directly verifying the authenticity of salary certificates, by communicating directly with employers, or linking with them.

Al Harmoudi expected that the coming period would witness the use of the “QR” code in many of the required certificates, most notably the salary certificate of the customer requesting financing.

It is noteworthy that the QR code allows immediate verification, displays more information, and allows access to websites and links of other parties easily through the phone’s camera and applications.

. Banks require that the various “allowances” appear in the account statements before they are included in the customer’s income.