The UAE Central Bank has issued an important statement to all UAE nationals and expatriates regarding salaries and loans at the start of the new year 2020.
In a related context, the UAE Central Bank stated that if the borrower’s client’s salary, whether it is Emirati or foreign, or from foreign expatriate labor, or from expatriates in the UAE is decreased for reasons other than retirement, banks can currently adjust the discount rate to 50% of the new low salary . To pay with the extension of the loan term, whether personal or real estate.
In this regard, the Central Bank stated in a new circular, "almo5tsr" obtained a copy of it, that if the period of the personal or real estate loan exceeds the limits allowed as a result of the salary drop, no bank or financing company may grant additional facilities or funds to the customer.
And it showed that in the circular (No. 5060/2019) that "the bank or financial company, once knowing that the borrower has retired, should immediately reduce the debt burden ratio to a ratio of up to 30%."
On the one hand, that bank has clarified the UAE center, and if the salary falls for reasons other than retirement, it is possible to adjust the debt burden ratio to 50% of the low salary, by extending the term of the loan.
The bank added the Emirates Center: "In both cases, no bank or financing company may grant additional facilities or funds, when the period of the personal or real estate loan exceeds the regulatory limits set for each of them."
Meanwhile, Nora Abdullah, head of personal finance at a bank, revealed, "Usually banks extend the repayment of loans, if the customer requests a restructuring, defaulting or moving from one business to another with less pay or retirement."
And Nora Abdullah showed and showed that "the citizen usually benefits from the advantage of extending the term even if it exceeds the maximum set by the central bank, while the loans granted to residents are limited to a period of four years to obtain a personal loan, or 15 years for the mortgage."
Nora Abdullah pointed out that the circular came to give banks a wider choice, provided that this does not conflict with the risk management internally for each bank, as the emphasis came on organizing the granting of loans, not to give clients personal loans or any other financing as a property, and included a commitment not to exceed the salary deduction or Income is 50%, and 30% in retirement.
It should be noted that the banks used to deduct the full end of service gratuity from the loan balance due to the customer, when he transferred to another job with a lower salary, or extended the payment period by conducting a restructuring to reduce a discount, accompanied by an increase in the interest rate.
Loan guarantee is an important factor for the borrower
On the one hand, the banking expert, Mustafa Al-Rikabi, revealed that the banks obtain a guarantee from the borrower and the authority in which he works, which is to transfer the end-of-service gratuity in the event of leaving the work, or transfer it to another work, and sometimes with a lower salary.
On the other side, this comes in such a way that some banks take the end of service gratuity and deduct them from the remaining balance of the loan, while others extend the period, provided that the central bank does not exceed the maximum set by the bank, especially for residents, and does not take the bonus.
He added to Mustafa the banker, the banker, that the goal is to ensure the customer continues to pay, provided that the discount does not exceed 50% of the "central" decision.