The Central Bank of the UAE on Monday announced the introduction of the International Bank Account Number (IBAN) as a standard for identifying all bank accounts in the UAE, starting on November 19, 2011.
The IBAN will be applicable to all account categories across banks in the UAE, marking the country’s further integration with global banking and payment transfers practices.
WHAT IS IBAN?
IBAN stands for International Bank Account Number. An IBAN is not a new account number, but simply a new format for an existing bank account number that will be recognised internationally. It has been developed by the European Committee for Banking Standards to improve the efficiency of cross-border payments with regard to speed, quality and cost.
The IBAN is being introduced in Europe to facilitate the automatic processing of cross-border payments. IBAN includes all the necessary details for a receiving bank to apply the payment directly to a beneficiary’s bank account without any manual intervention. An IBAN contains information relating to the country, bank and branch of the beneficiary as well as the account number itself.
A comparison with a telephone number can help illustrate this. For local calls the basic phone number is sufficient, for international calls the country and area code are required. Similarly with payments, the basic account number can be used domestically, but the IBAN should be used for international payments.
As part of the transition to this new system, all bank account holders in the UAE will be provided with a unique 23-digit account number, for each of their accounts which will replace their existing account number for all transaction purposes. All banks across the country are responsible for the distribution of IBAN to their respective account holders.
A central bank statement said: Introduction of the IBAN is a strategic initiative that will further align the UAE banking system with the standards applied in other global banking systems. The adoption of IBAN is a step in the right direction towards increasing the efficiency of electronic payments in the UAE, while further strengthening the country?s status as a global financial centre.
IBAN is the ISO standard account system that is aimed at enhancing efficiency and security for local and international electronic payments. From 19 November, customers will be required to use their IBAN to complete any local or international payment transactions. Additionally, the customer will need to ensure that their IBAN is used by the sender when they receive electronic payments, both locally and internationally, the central bank added.
“The adoption of IBAN is a step in the right direction towards increasing the efficiency of electronic payments in the UAE, while further strengthening the country’s status as a global financial centre,” the central bank statement emphasised.
The chief financial authority of the UAE assured that it has carefully examined the benefits and challenges of implementing IBAN from the experience of other countries. “We are confident that this extensive analysis will enable us to successfully transition to the new system without any disruption of banking services and with minimal impact to customer requests,” the bank said.
The implementation of IBAN will allow electronic payments to be sent and received seamlessly between banks in the UAE and in those countries where IBAN has been adopted. For all other banks, the traditional account number along with bank and branch identifiers must be specified in the transaction record.
Currently, over 50 countries in the world use the IBAN standards. This includes all European Union states, as well as regional states such as Kuwait, Lebanon, Saudi Arabia and Tunisia.
Sources: Gulf News, Khaleejtimes, Skynet
(By Chetankumar Pujari; Edited by Moign Khawaja)