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Saturday, March 2, 2024

“UAE Unveils Regulatory Framework for Short-Term Credit Facilities”-1

Acknowledging the evolving landscape of consumer financial preferences, especially the rising demand for “Buy-Now, Pay-Later” and similar credit offerings, the Central Bank of the UAE (CBUAE) has introduced a set of amended regulations governing finance companies.

New Framework for Short-Term Credit

Under the revamped framework, entities can engage in providing short-term credit either as agents of licensed banks or finance companies, subject to CBUAE approval. Additionally, entities can opt to conduct such activities by obtaining a license from CBUAE as restricted license finance companies.

Compliance for Unlicensed Entities

Unlicensed entities currently involved in any form of short-term credit activity must take specific actions to comply with the new regulations. They can choose to apply to CBUAE for licensing as a restricted license finance company or establish partnerships with licensed finance companies or banks.

Ensuring Transparency and Prudent Management

The introduction of these regulations emphasizes CBUAE’s commitment to ensuring transparency and establishing well-defined organizational structures for finance companies and restricted license finance companies in the UAE. The objective is to promote prudent management within a framework of permissible activities, supported by adequate financial resources and internal risk management systems.

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