UAE central bank introduces framework for regulation of short-term credit facilities

Economy

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

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