Get to know the new loan transfer laws, issued by UAE Central Bank

The Central Bank of the UAE has modified the conditions for the transfer of individual loans from one bank to another. Banks and finance companies are now obliged to reduce the profit and interest rate and not to increase the repayment period.

This came in line with the decision issued by the board of directors of the central bank to amend the system of bank loans and other services provided to individual customers.

Based on the provisions of the Federal Law, the Board of Directors of the Bank has decided to replace the provisions of paragraph (B) of Article (20) of the Loan Law with the following texts:

– Customers may transfer their loans from any bank or finance company operating in the country in exchange for the payment of an early repayment commission not exceeding 1% of the remaining loan or AED 10,000, whichever is lower. Any bank or financing company operating in the country shall accept the transfer under the following conditions :

– Full compliance with the requirements of the system for loans granted after the issuance of this decision is required, in particular those decisions relating to loan amount, payment period, and monthly deduction.

– For loans granted before the issuance of these decisions, interest rate shall be reduced. While repayment period and loan balance should not be increased by granting additional loans or funds to the customer.

The Board of Directors of the Central Bank called on the public to communicate the amended law to all concerned parties.