The maximum total Short-Term Credit extended to a Borrower by a Restricted Licence Finance Company or Agent, at any given time must not exceed Twenty Thousand Dirham (AED 20,000) or the total of three (3) months’ verified net income of the Borrower, whichever is lower (subject to any restrictions established in relevant UAE laws).
23.2
The maximum credit granted to a Borrower should be based on the results of affordability assessments conducted, given due consideration to the repayment ability, reducing the risk of overindebtedness and ensuring the fair treatment of Borrowers.
23.3
Restricted Licence Finance Companies or Agents must not charge interest on Short-Term Credit.
23.4
The total Fees, including late payment Fees charged on any Short-Term Credit by a Restricted Licence Finance Company or Agent, must not exceed 30% of the original credit amount. Therefore, the maximum recoverable amount from a Borrower on any Short-Term Credit, including where the credit is restructured, rescheduled, rolled-over or where there is any other deviation from the original agreement, must not total more that 130% of the value of the original credit granted to the Borrower. The Central Bank will review this requirement at regular intervals to ensure appropriateness of the maximum percentage and to adjust as needed, in the context of inter alia prevailing market conditions.
23.5
The repayment term of Short-Term Credit offered by a Restricted Licence Finance Company or an Agent must not exceed twelve (12) months from the date of the original agreement to lend, including any form of credit restructuring, rescheduling, roll-over or other form of deviation from the original agreement, affecting both the amount and the original term of the Short-Term Credit.
23.6
Restricted Licence Finance Companies and Agents must honour the original term of the Short-Term Credit and must not demand full payment prior to the end of the term of the credit agreed upon in the Borrower contract.
23.7
Borrowers’ assets, including movable and immovable property, must not be used by Restricted Licence Finance Companies or Agents to secure (whether fully or partially), any Short-Term Credit extended to a Borrower. Implementation of this requirement must be in alignment with Article (121 bis) of the Central Bank Law.