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The main three types cover the overdraft, car financing, and personal loan in UAE and they are binding to all the 51 banks & other financing companies that are operating in the 2nd largest economy in the Arab.
Those forms that are shortly enforced have been prepared following various rounds of consultations and negotiations between the UAE Central Bank & the Emirates Banks Association that groups all the banks in the Emirates.
These new contracts allow the banks to ask the borrowers for making sure all the borrowers are covered under a life insurance or disability insurance plan, in a few cases to confirm that the loans would be repaid as the loan provider can make use of its value for regaining the rest of the funds.
The forms should include all the details regarding the loan size, maturity, and rates of interest while the borrowers should submit a letter from their employers committing them to have their salary and the end of service facilities transferred to that bank within the term of the loan.
The Central Bank defines 7 cases where the period of the loan must get suspended and the payment should be done instantly, including the termination of the borrower’s services, salary transfer to another bank with no prior approval from the bank, violation of any of the loan terms by the loan borrowers, defaulting on the payment of 3 successive installments or 6 non-successive installments, providing false information by the borrower, demise of the borrower, the departure of the client from the Emirates permanently.
When it comes to the overdraft, the fresh contract lets banks to cancel or decrease such options any time they consider important and for asking the borrowers for paying back at a date as determined by the loan provider, provided the loan borrowers get a notice of 30 days.
The 3 loan types clearly describe the relationship between lenders and borrowers. One of the terms stresses that the concerned bank should not open an account & agree to provide a loan before the loan borrower submits all the necessary documents as requested by the lender or the bank. Another term allows the banks to close the borrower’s account in case they provide them with the cheques, which bounce.
These forms also allow the banks to offer all the necessary details regarding the borrowers & their accounts to the courts or the other competent departments.