The Central Bank of the UAE is set to review lending rules that put a cap on lending to retail customers.
The new rules were put in place at the beginning of the year and limit personal borrowing to 20 times a customer’s monthly salary, and repayment periods to 48 months. Monthly loan installments should not exceed half of a customer’s salary as well.
The new rules were introduced to stop another credit bubble forming after the rapid acceleration in credit growth during 2006-08 led to a large number of bad loans in the UAE banking system.
The central bank is weighing up the need to stimulate economic growth through getting the banking sector to lend more and also protecting consumers from becoming over-leveraged.