The banking domain in the United Arab Emirates (UAE) is governed by the Central Bank, which specifies certain guidelines to maintain sufficient consistency in the system. Well, the Central Bank very strongly recommends banks across United Arab Emirates to devise a discreet credit policy and loan structure (that includes on-and off items in the balance sheet) and relevant documentation prior to the allocation of loan to customers. It also highlights the importance of a comprehensive evaluation of customer creditworthiness in addition to the credit payback history. There are various national banks in the UAE such as the Dubai Bank, Abu Dhabi Islamic Bank, Al Hilal Bank, United Arab Bank PJSC Commercial Bank of Dubai, Mashreq Bank, Emirates Islamic Bank, Commercial Bank International, Dubai Bank, Dubai Islamic Bank PJSC, Emirates NBD Bank, , First Gulf Bank, Noor Islamic Bank, RAKBANK, Sharjah Islamic Bank, Union National Bank and National Bank of Abu Dhabi, Abu Dhabi Commercial Bank and the Arab Bank for Investment and Foreign Trade (Al Masraf).
Likewise, few of the foreign banks include HSBC Middle East Limited, Lloyds TSB Bank PLC, Bank of Baroda, Barclays Bank, Bank Saderat Iran, Citi Bank, Doha Bank, Habib Bank A.G. Zurich, National Bank of Bahrain, National Bank of Oman and Standard Chartered Bank. Al Etihad Credit Bureau that was officially launched in September 2014 maintains a complete credit history record of every borrower of loan in addition to their credit cards dues, loans availed, debts incurred, repayments missed and bounced cheques. Acquiring a Credit Report in UAE is quite simple wherein residents have to submit their Passport and UAE Identity Card, besides paying 110 AED towards the fees that will enable them acquire their credit report within 15 minutes. Well, there are certain guidelines to loans in UAE that are laid by the Central Bank.
A resident’s debt should not be greater than 50 % of their income and if a loan could prolong into their retirement age, banks should allow a 30% reduction in their income or pension. With regards to Personal Loans, Personal Loans residents would have to repay the same within a period of 48 months from their salary, restitution or through any form of legitimate income from a valid and credible source. With regards to Car Loans, as directed by Central Bank are not supposed to exceed 80% of the total car value and the loan ought to be repaid within 60 months. IN UAE, Credit Cards are offered only to residents annual revenue is equal to equal or exceeds AED 60,000 and banks provide monthly purchase statements including money withdrawals. On the guidelines of the Central Bank, banks in UAE should compute interest rates on loans availed and other overdraft balances according to this formula:
Interest Amount = Principal Amount x Interest Rate x Period of Loan (in months) + 1
Residents will need to submit a few essential documents to avail personal loans, such as documents related to identity proof (passport), income and bank statements. A few of the associated charges that accompany personal loans include processing fees, charges for issue of cheque book, charges levied towards late payment and pre-payment in addition to others.