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  • Amendments of the Regulations Regarding Bank Loans & Other Services Offered to Individual Customers No. 29/2011

    • Amendment of page No. 5 of the Regulations Regarding Bank Loans & Other Services Offered to Individual Customers No. 29/2011

      Please note that page number 5 of the Regulations Regarding Bank Loans & Other Services Offered to Individual Customers No. 29/2011 dated 23 February 2011 is to be replaced by the attached.


      d) In order to ensure that the monthly installments deducted for repayment of this loan and resulting interest are kept in a reasonable proportion to the customer's income, the deductions from his salary and/ or regular income must not exceed the limits specified under Article (7) of these Regulations.

      e) Loans extended to sole proprietorship firms and companies, secured by salary of the owner or salaries of the partners shall be treated the same way this loan is treated, and shall be subject to the same terms and conditions.

      f) This loan shall be extended as per an application by the customer to be approved by the bank or the finance company, and it should be drafted in the manner set out in Article (12) hereof.
       

      Article (3)
      Car Loan

      a) Car Loan: Is a loan extended by the bank or the finance company to its customer for the purpose of purchasing a private car.

      b) Car loan shall be treated as separate from the personal consumer loan, and should not exceed (80%) eighty percent of the value of the financed vehicle.

      c) Repayment Period: The maximum period for repayment of the loan shall be (60) months.

      d) Security: This loan should be secured by a mortgage over the car.

      e) Car loans extended to sole proprietorship firms and companies, secured by salary of the owner or salaries of the partners shall be treated the same way this loan is treated, and shall be subject to the same terms and conditions.

      f) This loan shall be extended as per an application by the customer and approved by the bank or the finance company, and it should be drafted in the manner set out in Article (12) of these Regulations.

    • Amendment of page (14) of Regulations Regarding Bank Loans & Other Services Offered to Individual Customers

      We hereby attach page (14) of the Regulations Regarding Bank Loans & Other Services Offered to Individual Customers, please replace page (14) in the copy of the Regulations you have with this page, where paragraph (b) was added.

      This amendment shall become effective from the date of this Notice.

       


      Article (19)
      Interpretation of these Regulations

      The Legal Development Unit of the Central Bank shall be the reference for interpretation of the provisions of these Regulations.
       

      Article (20)
      Currently Outstanding Loans

      1. a- The provisions of these Regulations shall apply to all banks and finance companies including Islamic banks and Islamic finance companies in relation to personal consumer loans and car loans granted by these entities currently existing, except for commissions, fees or any fines charged on them prior to the date on which these regulations come into force, which is considered finalized.
         
      2. b- Any borrower may transfer his loan / finance from any bank or finance company operating in the UAE against paying of an early payment fee not exceeding 1% of the outstanding balance of the loan, or AED 10,000, whichever is less. Another bank or a finance company operating in the UAE may accept the transfer regardless of the fact that the loan or the finance balance exceeds the limits allowed under these regulations. In case of excess, however, the balance of the loan or the finance may not be increased by extending an additional loan or a finance to the borrower.
         

      Article (21)
      Publication

      These regulations shall be published in the Official Gazette in both Arabic and English, and shall come into effect one month after date of its publication.

    • Additional Clarifications to Regulation No. 29/2011 Regarding Bank Loans & Services Offered to Individual Customers

      N 4501/2011 Effective from 7/7/2011

      Further to our Notice No 2901/2011 dated 28/04/2011 on the Clarifications and Guidelines Manual, several banks have sought guidance and clarifications on some additional matters. After reviewing their responses, it has been decided to add the attached clarifications.

      Other issues, which are currently under discussion with the banks, shall be clarified in due course.

      • ANNEXURE TO NOTICE NO. 4501/2011 dated 07/07/2011 Clarifications to Regulation No 29/2011 dated 23.02.2011 on Bank Loans and Services Offered to Individual Customers

        Article (2) - Personal Loan:

        1. If certain existing personal loans availed by UAE Nationals have been fully or partly utilised for Residential Real Estate purposes, banks may with the explicit consent of the borrower suitably segregate them and set up separate loans in accordance with these guidelines and internal policies of the bank. All real estate loans should be supported by official and other documents regarding purchase, development or improvement of the property. The related installments should not exceed 50% limit alongwith other repayments in accordance with the Regulations.

        Article (7) - Repayment Installments:

        1. In existing loans not covered under (1) above where total repayment burden exceeds 50% of gross salary and regular income, banks may agree to restructure/ reschedule the loan for longer than 48 months provided no fresh funds are made available to the borrower till regularization within the laid down criteria.
           
        2. Banks are permitted to defer upto two instalments in a year at their discretion.

         

    • Regulations Regarding Bank Loans and Other Services Offered to Individual Customers - UAE Nationals

      Reference to our letter dated 07/05/2013, regarding the above subject.

      Please note that the moratorium period to reschedule loans of other banks advanced to national customers has ended today 06/08/2013.

      Accordingly, you are permitted to buyout and transfer these loans from other banks on condition that you strictly abide by the following:

      1. 1) Terms of Regulations Regarding Bank Loans and Other Services Offered to Individual Customers.
         
      2. 2) Repayment installment for all loans at all banks and lending entities must not exceed 50% of the regular income of the borrower.
         
      3. 3) Loan repayment period must not exceed 48 months, expect for certain loans exempted by the Central Bank.

      Non-compliance with these instructions would subject your bank to severe sanctions, in addition to Government refraining from dealing with your bank.

      Yours faithfully,

       

    • Clarifications regarding Central Bank's Regulations concerning Personal Loans and Mortgage Loans

      After greetings,

      The Central Bank would like to clarify the following points regarding Central Bank)s Regulations concerning personal loans and mortgage loans:
       

      1. 1- Notice No. 4501/2011 dated 07/07/2011 provided banks and finance companies an option, back then, to separate residential real estate loans from personal loans availed by UAE nationals, with the overall installments not to exceed 50% limit along with other repayments in accordance with the Regulations. This has become clear-cut with the issuance of Regulations regarding Mortgage Loans on 28/10/2013.
         
      2. 2- As per the definitions mentioned in the Regulations regarding Mortgage Loans, Mortgage Loan is defined as a loan that is collateralized against a residential property granted for the purpose of constructing, purchasing or renovating a house for owner occupier or investment purposes. It also includes loans granted for the purchase or the development of land for these purposes.
         
      3. 3- Under Article (3) of the Regulations regarding Mortgage Loans, the maximum DBR allowed is set out in “Regulations Regarding Bank Loans and Other Services Offered to Individual Customers”- i.e. 50 percent of gross salary and any regular income from a defined and specific source at any time.
      4.  
      5. 4- Notice No. 4501/2011 dated 07/07/2011 also gives the banks an option to restructure/reschedule personal loans, which their total repayment burden exceeds 50% of gross salary/regular income, for longer than 48 months provided no fresh funds are made available to the borrower. Therefore, the purpose is to bring down the DBR to 50% and less without any additional finances.
      6.  
      7. 5- Central Bank's requirements to buyout and transfer loans from other banks are mentioned in Notice No. 13/1187/2013 dated 06/08/2013 (copy enclosed).

      Therefore, banks and finance companies must stop marketing or offering any products that are not in line with Central Bank's Regulations and the above clarifications.

       

    • Amendments to Regulation No. 29/2011 Regulation regarding Bank Loans & Other Services Offered to Individual Customers

      N 193/2018 Effective from 25/9/2018

      After greetings,

      Reference to Regulation 29/2011 regarding Bank Loans & Other Services Offered to Individual Customers, its amendments and additional clarifications, and in order to stop the unacceptable practices related to the purchase and transfer of UAE nationals’ loans among banks that increase the burdens of UAE nationals, and after consultation with the banking industry, the Board of Directors of the Central Bank has decided to introduce amendments to the above Regulation, its amendments and additional clarifications.

      We enclose herewith a copy of the Amendments to the Regulation regarding Bank Loans & Other Services Offered to Individual Customers. These amendments are effective from the date of this notice.

      Please comply with these amendments to avoid regulatory actions, in addition to listing your bank’s name on the list of non-cooperative banks in implementing the Government initiatives focusing on resolving the problem of UAE nationals’ loans burden.

      Yours faithfully,

      • Central Bank Board of Directors' Resolution No. 26/3/2018 of Amending Regulation No. 29/2011 - Regulation regarding Bank Loans & Other Services Offered to Individual Customers

        Chairman of the Board,

        Having perused the provisions of Union Law No. (10) of 1980 concerning the Central Bank, the Monetary System and Organization of Banking; and

        Regulation No. 29/2011 - Regulation regarding Bank Loans & Other Services Offered to Individual Customers, its amendments and additional clarifications.

        The Central Bank’s Board of Directors has issued the following resolution:

        • Article One:

          The texts of paragraph (b) of Article (20) of Regulation No. 29/2011 - Regulation regarding Bank Loans & Other Services Offered to Individual Customers shall be replaced with the following texts:

          (Any borrower may transfer his/her loan/financing from any bank or finance company operating in the UAE against paying of an early payment fee not exceeding 1% of the outstanding balance of the loan, or AED 10,000, whichever is less. Another bank or a finance company operating in the UAE may accept the transfer under the following conditions:

          1. For loans granted after the issuance of this Regulation, the requirements of the Regulation must be fully complied with, in particular those relating to the loan or financing amount, the repayment period and monthly deduction.
             
          2. For loans granted prior to the issuance of this Regulation, the profit/interest rate should be reduced and the repayment period or loan/financing balance should not be increased by granting an additional loan or financing to the borrower.)

        • Article Two:

          To cancel the additional clarifications under the numbers (2.1) and (7.2), issued by Notice No. 4501/2011 of 7/7/2011.

        • Article Three:

          This Resolution shall be communicated to whomsoever is concerned for implementation, and shall be published in the Official Gazette in both Arabic and English.

    • Amendments to Appendix 2 of Regulation No. 29/2011 - Regulations regarding Bank Loans & Other Services Offered to Individual Customers

      N 3986/2019 Effective from 8/10/2019

      Please be informed that the Board of Directors of the Central Bank has issued Decision No. 96/By Circulation/2019, regarding the following:

      1. 1- Amending Appendix 2 of Regulation No. 29/2011 - Regulations regarding Bank Loans & Other Services Offered to Individual Customers (Copy enclosed). By this amendment, the early settlement or partial settlement fee applying to home loans has been reverted to maximum 1% of the outstanding balance or AED 10,000, whichever is less.
      2.  
      3. 2- Banks and finance companies that arbitrarily changed the stated terms of the fees in existing customer agreements, thus violated item 7 of the amendments of Regulation No. 29/2011 attached to Notice No. 157/2018, are required to respect the original terms of the agreements and refund all overcharges for all customers based on their original fee within 30 days of this notice.

      We attach herewith a copy of the above Decision and please circulate it internally.

      The attached Decision comes into force with immediate effect.

      • Central Bank Board of Directors’ Resolution No. 96/By Circulation/2019 of Amending Appendix 2 of Regulation No. 29/2011 - Regulations regarding Bank Loans & Other Services Offered to Individual Customers

        Governor,

        Having perused the provisions of the Decretal Federal Law No. (14) of 2018 Regarding the Central Bank & Organization of Financial Institutions and Activities; and

        Regulation No. 29/2011 - Regulations regarding Bank Loans & Other Services Offered to Individual Customers, its amendments and additional clarifications.

        The Central Bank's Board of Directors has issued the following resolution:

        Article One:

        The Appendix 2 of Regulation No. 29/2011 - Regulations regarding Bank Loans & Other Services Offered to Individual Customers shall be replaced with the enclosed appendix.

        Article Two:

        This Resolution shall be communicated to whomsoever is concerned for implementation, and shall be published in the Official Gazette in both Arabic and English.

         

        Amendment to the Regulations Regarding Bank Loans & Services Offered to Individual Customers (29/2011)

        Introduction:

        Please note that paragraphs 4 and 5 are cancelled by Notice No. (2535/2022). 
        1. This Amendment applies to and forms part of the Regulations Regarding Bank Loans & Services Offered to Individual Customers (29/2011) (the “Regulations”). It applies specifically to Appendix 2 of those Regulations, which set out the “Maximum Limits for Fees and Commissions Charged on Retail Customer Service”. Upon coming into force, this Amendment replaces the previous version of Appendix 2 and is mandatory and enforceable in the same manner as the Regulations. This Amendment also replaces any other fee caps set out by the Central Bank at this time but not future caps set outside of the scope of this document.
           
        2. All fees set out in this Amendment are exclusive of UAE VAT charges.
           
        3. Article 11 of 29/2011 remains in force and banks and finance companies must comply accordingly.
           
        4. Banks and finance companies will need to notify and seek approval from the CBUAE ex-ante for any planned introduction of a new fee or a change in existing fee levels (which are larger than 5%) not capped by this amendment. Such notifications can be submitted to the CBUAE during the first 5 business days of April and October of any given year.
           
        5. The Central Bank will accept ad hoc notifications for exempt fees on an ad hoc basis where it is shown to the Central Bank’s satisfaction that these relate to new products. This will be assessed on a case-by-case basis.
           
        6. The fee caps set out in this Amendment represent the maximum permissible charges. Banks and finance companies must have appropriate product approval processes in place for all products, which include an examination of the basis and appropriateness of a fee calculation and, if applicable, must charge lower fees than those prescribed in these caps.
           
        7. The Central Bank will supervise regulated entities to ensure that rates are applied in a fair and appropriate manner. This will include ensuring that regulated entities do not automatically default to using maximum caps where actual costs may be lower.
           
        8. Regulated entities to which the Regulations apply are required to provide the Central Bank with a full list of the fees they charge no later than 30 days after this Amendment comes into force. Up to date fees should also be made publicly available and should be easily accessible for consumers (e.g. online and in branches).
           
        9. These fee caps will be reviewed on an annual basis for continued suitability.

         

        Maximum Limits for Fees and Commissions Charged on Retail Customer Service

        No.ProductFeeCap (AED)
        1Personal AccountsAccount closure fee100
        2Personal AccountsAccount balance letter50
        3Personal AccountsNo liability certificate60
        4Personal AccountsRelease letter50
        5Personal AccountsLiability letter issued to Govt Departments/embassies60
        6Personal AccountsLiability letter issued to financial institutions60
        7Debit CardIssuing supplementary ATM Card25
        8Debit CardReplacing Secret Pin Code25
        9Debit CardReplacing lost or stolen ATM card25
        10Debit CardOwn ATM fees0
        11Debit CardFees for using other bank’s ATM2
        12Debit CardCopy of sales slip25
        13Consumer LoansDelayed payment penal interest chargesMax 200
        14Consumer LoansEarly settlement from other bank loans1% Max 10,000
        15Consumer LoansFinal settlement from other sources/EOSB1% Max 10,000
        16Consumer LoansPartial payment1% Max 10,000
        17Consumer LoansRevolving overdraft fees200
        18Consumer LoansLoan Cancellation Fee100
        19Consumer LoansOther (loan copy, issuing redemption statements, audit confirmation etc)25
        20Car LoansEarly settlement1% outstanding
        21Car LoansNOC to Traffic Department0
        22Car LoansAdvance payment of installment1% of installment
        23Car LoansLate payment penal chargesMax 500
        24Car LoansIssuance of liability letter to other banks60
        25Car LoansCancellation fee100
        26RemittanceSwift copy charges15
        27RemittanceDemand draft/pay order issuance/cancellation75
        28Customer Term DepositsAccount closure fees-terms depositsCost (max 2%)
        29Credit CardsCard replacement fee75
        30Credit CardsLiability/no liability letter50
        31Credit CardsDuplicate statement45
        32Credit CardsCopy of sales voucher65
        33Credit CardsLate Payment feesMax 230
        34Home LoansLate payment feesMax 700
        35Home LoansEarly settlement feesMax 1% of outstanding balance or 10,000, whichever is less
        36Home LoansIssuance of liability letter85
        37Home LoansOther certificate75
        38Home LoansNon-standard statement production/copy of original documentation100
         Home LoansProperty swaps administration feeMax 1320
        (valuation included)
        40Home LoansIssuance of NOC150
        41Home LoansPartial settlement chargesMax 1% of outstanding balance or 10,000, whichever is less
        42Home LoansClearance letter95
        43Home LoansRequest of other letters90

         

    • Loans Against Property (Loans to Individuals)

       

      It has come to the attention of the Central Bank that many banks are introducing various loans against property schemes as mortgage loans, in violation of Regulations Regarding Mortgage Loans, Circular No. 31/2013 dated 28/10/2013 (Regulation 31/2013).

      The following guidelines are issued to ensure that banks and finance companies comply with the above Regulations, as well as, Regulations Regarding Bank Loans & Other Services Offered to Individual Customers, Circular No. 29/2011 dated 23/2/2011 (Regulation 29/2011).

      1. Under Article 1 of Regulation 31/2013, a mortgage loan is defined as: ‘A loan that is collateralized against a residential property granted for the purpose of constructing, purchasing or renovating a house for owner occupier or investment purposes. It also includes loans granted for the purchase or the development of land for these purposes.’ This was further clarified by Central Bank’s Notice No. 22/2017 dated 17/1/2017 (copy enclosed).
         
      2. Any other personal loans granted by banks and finance companies using property as collateral for purposes other than those stated in the above definition must not be classified as a mortgage loan and hence fall to be treated in accordance with the provisions of Regulation 29/2011.
         
      3. Accordingly, banks and finance companies are not allowed to extend the tenor of such loans beyond 4 years and must not take private houses as security for personal loans, as per Article 15-5 of Notice No 2901/2011 dated 28/4/2011 (copy enclosed).
         
      4. Banks and finance companies must ensure, in case of any personal and mortgage loans, that the DBR does not exceed 50% or 30% (in the case of retirees) of salary or regular income as the case may be. As soon as the bank/company is aware that a borrower is retired, immediately the DBR must be reduced to 30% as per Article 7-2 of Notice No. 2901/2011 dated 28/4/2011.

         In addition, in case of salary reduction for reasons other than retirement, the bank/company could adjust the DBR to 50% of the reduced salary by extending tenor, as per Article 20-3 of Notice No. 2901/2011 dated 28/4/2011, and in both cases, no bank or finance company should provide additional facilities/funds when the remaining tenor of personal/mortgage loans exceeds the respective regulatory limits.
         
      5. Personal and mortgage loans should not be structured as an overdraft (OD).

      Please abide by the above guidelines and ensure full compliance with the above two Regulations at all times.

       

    • Amendments to Appendix 2 of the Regulations Regarding Bank Loan & Other Services Offered to Individual Customers and Consumer Protection Standards

      After greetings,

      Following a review of the consumer protection regulatory framework, the Board of Directors of the Central Bank has decided to introduce amendments to the Appendix of the above Regulations and Consumer Protection Standards, as follows:

      1. Amendment of Appendix 2 of the Regulations Regarding Bank Loan & Other Services Offered to Individual Customers (Circular 29/2011) amended via Notice No. 3986/2019 (copy enclosed); and
         
      2. Amendment of the Consumer Protection Standards issued via Notice No. 1158/2021 dated 24 February 2021 (copy enclosed).

      These amendments cancel the requirement for obtaining Central Bank’s approval to impose new fees, or increase existing fees not capped by the Central Bank by more than 5 per cent. The amendments are as follows:

      1. Paragraphs 4 and 5 of Notice No. 3986/2019 mentioned above are cancelled.
         
      2. The text of Paragraph 5.1.1.22 of the Consumer Protection Standards is replaced by the following new text:

      “Any increase of Fees that are capped by the Central Bank must not exceed the limit imposed by such caps. Please refer to the Maximum Limits for Fees Annexure contained in the Consumer Protection Standards.”.

      In addition, paragraphs 5.1.1.23 and 5.1.1.24 are cancelled.

      Licensed Financial Institutions are reminded of their obligations in paragraph 2.1.1.47 of the Consumer Protection Standards which states:

      “If the Licensed Financial Institution decides to make Permissible changes to the contract, the Licensed Financial Institution must give Consumers a minimum of 60 calendar days’ notice before changes to the terms and conditions of a Financial Product and/or Service, including changes to Fees, can take effect...”

      The above amendments come into effect immediately.

      Yours faithfully,