Dh250,000 limit on personal loans may be removed soon

The draft of a new system of personal loans to be issued shortly may abandon the Dh250,000 ceiling on personal loans in the country, Emarat Al Youm reported today, quoting unnamed sources in the UAE Central Bank.

The salary conversion applicable under the current rules imposes a limit of Dh250,000 on personal loans even for high earning applicants. 

The Arabic daily quotes the source as saying: “The new system will allow the client 20 or 30 or 50 times the [monthly] salary, according to the board of the bank on the final form of the draft.”

It was mentioned that bankers in the country have been requesting a reconsideration of the upper limit for personal loans for a while now. The bankers maintain that the current law has been in place for almost 20 years, during which time a significant change in economic conditions and prices has been witnessed.

They point out that removing the limit on personal loans will not be incompatible with the banks’ conservative lending policies as banks will remain committed to undertaking due diligence before offering an increased level of loans.

The daily quoted Suleiman Al Mazroui, board member of the Union of Arab Banks, and General Manager for Group Corporate Communications at Emirates NBD, as saying: “The needs of individuals have changed significantly over the past 10 years, and the prices have witnessed great increases in various fields.”

Abdul Wahed Juma, Head of Corporate Communications at First Gulf Bank, added that legislature should reconsider the ceiling of the personal loan because, in practice, the needs of their customers are beyond the amount specified, which is Dh250,000.

Faisal Aqil, Director of Retail Banking at Emirates Islamic Bank, said that there is a category of employees with salaries up to Dh100,000 a month, and who are able to pay monthly premiums of up to Dh30,000. He said it made sense to find a way to meet the requirements of such clients.

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