The Central Bank of the UAE (CBUAE) has amended the Finance Companies Regulation following global shifts in consumer financial trends and the growing popularity of “Buy-Now, Pay-Later” credit products and services.
The revised regulation entails that short-term credit can be carried out by entities operating as agents of licensed banks or finance companies, following the approval by CBUAE, the apex bank said in a statement.
Restricted License Finance Companies can also carry out short-term credit facilities in a similar manner after securing CBUAE approval.
“Unlicensed entities which carry on any form of short-term credit activity and intend to continue to carry on these activities, must either apply to the CBUAE to be licensed as a Restricted Licence Finance Companies; or partner with a licensed Finance Company or a Bank,” CBUAE said in a statement.
Finance companies regulation defines short-term credit as any credit granted to a borrower for not more than 12 months for purchasing goods or services without an interest being charged, or a lien being placed against collateral or a security deposit being required from the borrower.
SOurce: Zawya
