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Central bank issued the different forms for all types of commercial banks about the bank loans. This clearly stated in the Dubai newspaper that there is controversy in contracts and complaints by borrowers. Loan forms cover the three basic key forms; personal loans, car financing, mortgage loans and overdraft and these all binding to the 51 banks and other financing institutes which are operating in the second largest Arab economy.

These types of loans covered the many stages of negotiations and consultation of the Central bank and the Emirates bank Association. These contracts allow the bankers to ask from the borrowers to ensure that either the loans are covered or not. The loans which are given by the banks must be covered by a handsome amount of security or by the insurance company or the policy.

Before issuing the loan it must include all details about the size of the loan, maturity and interest rates while borrowers must submit a letter from the employer committing him to have his salary and end of service benefits transferred to that bank during the loan term.

For every type of loan banks allow their customers different types of terms and conditions like for the overdraft bank provides to their trust worthy customers extra amount rather than their savings that they can easily withdraw the money from the bank and to ask the borrowers to pay back at a date determined by the lender provided the borrower is given the 30 days notice.

The loan forms also bind the relationship between the borrowers and the lenders. For this, banks must open an account of the borrower in their bank and agree to give a loan before the borrower submits all the documents requested by the bank. Banks also require the all necessary information about borrowers and their accounts to courts and towards the other departments.

Banks also deduct the interests and commissions on the different amounts of withdrawals and outstanding on the loan from the date of withdrawal based on the number of actual days and on the basis of a year that is of 365 days and these interests are added to the loan balance so that it should be paid with the monthly installments. Commissions and fees which are incurred on the loan must be amend or impose on the regulations governed by the Central Bank.

In some cases banks terminate their services to the borrower if the transfer of salary made to another bank without the prior approval of the bank, any loan term violation by the borrower, make default payments or defaulting on payment of three successive installments or six non successive installments, presentation of wrong or false information or data, death of the borrower and the clients departure from the country permanently.


Central bank issued the different forms for all types of commercial banks about the bank loans. This clearly stated in the Dubai newspaper that there is controversy in contracts and complaints by borrowers. Loan forms cover the three basic key forms; personal loans, car financing, mortgage loans and overdraft and these all binding to the 51 banks and other financing institutes which are operating in the second largest Arab economy.

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Why Borrowers In Dubai Are Now Seeking Credible Mortgage Advice

Dubai is now one of the most sought after locations in the world. In fact, expatriates and foreign investors are now considering this emirate as a major business hub in the UAE. Although buying a property in this emirate is not that simple especially if you don't have the money to secure a property of your choice. That's why it's essential for you to take out a mortgage, but you need to get the best mortgage product based on your current circumstance.

People who are thinking about buying a property using mortgages are now seeking the help of mortgage brokers, since they can provide more options than banks. According to a recent study conducted by the Central Bank of Dubai it was revealed that mortgage brokers have increased their market share across the board on 2013. This is a clear indication that clients are finding the solutions provided by brokers more beneficial than those offered in banks.

Usually, brokers have access to over 300 mortgage products in Dubai, but they can also offer high quality properties that are not normally sold on the property market. Furthermore, brokers can provide several specialized services like:

  • They will prepare all the needed documents and communicate the terms between the mortgage provider and the borrower to ensure a smooth process
  • Borrowers can also save a lot of time and money, since they will guided by their broker until they secured the mortgage loan
  • Most importantly, brokers will provide an unbiased assessment of their client's financial situation and will only offer loans that are suitable to the borrower's financial capacity

These are the main factors why borrowers are now choosing brokers in securing the most favorable loan available to them. That's why even high value mortgage clients are now relying on brokers to find the right deal on the property market. Typically, these professionals are certified by RERA, a government body that has full authority and responsibility to regulate the real estate sector in Dubai.

A professional mortgage broker in Dubai know the laws and regulations pertaining to real estate financing in the UAE. These laws are designed to protect the rights of the consumers. Brokers will adhere to these laws since they are regulated by the government. There are constantly new regulations and new products hitting the market all the time. Licensed Mortgage Brokers will be updated by RERA to these changes, so they can provide the most ideal service to their clients.

However, it is advisable to check the track record of a particular broker before you decide to hire them. Always remember, using a credible mortgage broker will enable you to find the right deal from the right lender.

Gordon Robertson is a certified broker and licensed by the Central Bank of Dubai. His company, MortgageME is one of the leading commercial mortgage company in the UAE that provides unparalleled service in guiding their clients to the loan process. Checkout the most reliable mortgage calculator in Dubai through their website.

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Overview of UAE Banking Sector

The UAE banking sector is still in recovery stage, post the 2008-09 real estate crisis in Dubai. However, the financial performance of the banks has stabilised especially over the past couple of years. The UAE banks, particularly Dubai based banks, are facing asset quality challenges, as reflected in their high proportion of non-performing loans and low level of provisions. On the other hand, Abu Dhabi based banks appear relatively less challenged from these issues due to their relatively lower exposure to real estate and higher exposure to oil based industries, which did well amid favourable oil price environment.

The key concerns related to the UAE banks include i) concentration in loans and deposits, ii) high proportion of related party exposures, iii) limited data transparency/availability, and iv) stiff industry competition. Moreover, the performance of the UAE banks has been constrained by the still recovering real estate and construction sectors. Although the banks maintain a strong presence in their local markets, the banking sector has limited diversification and displays concentration in terms of geographies, products, and customers.

That said, most of the UAE based banks benefit from strong ownership structure backed by local governments. In addition, most of these banks are in the process of restructuring their problem loans. The economy of Dubai has shown encouraging growth in the past two years. All key sectors of the economy including real estate, trade, tourism, and services have shown a considerable improvement. The improved performance of the core sectors would result in re-classification of some of non-performing loans as performing loans, which would reduce stress on the banking sector in the medium term.

Recent political unrest in some countries in the MENA region has benefited UAE, owing to its safe haven status in the region. Dubai has strengthened its position as a regional financial hub and has become a key channel for investment across the MENA region. This has directly helped local banks. The key characteristics of the UAE banking sector are as follows.

i) Strong links to local governments: The UAE banking sector has been strongly dominated by the governments of Abu Dhabi and Dubai. The ruling families are also actively involved through their investments in the country, typically through their holding companies. The government's significant involvement in the UAE banking system proved beneficial during the global financial crisis. The authorities responded quickly when needed and supported local banks in 2008 and early 2009. The UAE Central Bank has provided liquidity support as well as deposits to banks in the past to alleviate funding pressure. Markets expect a continuous support to the UAE banks from local governments in future, if needed.

ii) Strong capitalization: The UAE banking sector exhibits a very strong level of capitalization. Its capital levels are supported by consistent profitability, strong earnings retention, and equity injections from the government in times of need. Total capital adequacy ratio of the sector has exceeded 20% over the past three years, the highest in the Gulf Cooperation Council countries. However, the high capital levels are also justified by some banks' high share of non-performing loans, which requires a higher level of capital than the average.

iii) Weak asset quality: The UAE banks are challenged by weak asset quality. Most of the banks based in Dubai have shown very high level of non-performing loans and insufficient provisions. Moody's expects non-performing loans of the UAE banks to remain in 10%-12% range in 2013. The agency also stated that despite recovery in core industries, the non performing loans are unlikely to reduce rapidly in the medium term due to banks' large exposure to troubled borrowers, especially in the real estate industry.

iv) Dependence on oil prices and global macro-economic conditions: The performance of the UAE economy, especially Abu Dhabi, largely depends on oil prices. Any sudden fall in oil prices could result in lower public spending by the Abu Dhabi government. This could impact the performance of Abu Dhabi based banks, which have largely been involved in financing government directed projects. Also, in the event of a sharp decline in oil prices, the resulting economic downturn may further impact lending activities of the banks. On the other hand, Dubai largely derives its growth from real estate, trade, tourism, and services industry. The performance of most of these sectors is linked to global economy. Any deterioration in global macroeconomic environment would directly impact Dubai's economy and its banking sector.

v) Limited credit differentiation: It is hard to differentiate between UAE banks just by looking at their credit metrics. Most of these banks are closely linked to local governments. The differences in asset quality and franchise value are the only primary distinguishing factors for the banks in the country.

vi) High competition: The UAE is an overbanked region. There are 51 banks currently operating in the UAE. This has resulted in stiff industry competition and has pressurized net interest margins of the banks.

Chirag Sharma is Digital Marketing Consultant in SJ Seymour group headquartered in Hong Kong. SJS Markets provides research, advisory, execution services and private wealth management solutions.

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