The UAE has 23 local banks and 28 foreign banks. These financial institutions, through their branch networks and affiliate service centres, cater to the financial needs of the UAE population of approximately 8.2 million. Besides conventional banking, UAE also offers Islamic banking which has seen a tremendous growth in the recent years. All banks offer Automated Teller Machine (‘ATM’) facilities which operate on a central ‘Switch’ system. A customer of a particular bank can, therefore, use any other bank’s ATM for conducting banking transactions. In the context of organising the banking activities, the UAE Central Bank has taken certain measures and issued a number of directives in 2011 for regulating loans and other services offered to Individuals, implementation of IBAN, regulating provisions on loans etc. In the background of these new banking sector legislations, the UAE is in a better position to weather adverse shocks and global headwinds which will help the banks to gradually overcome asset quality and loan exposure issues.
The most common account types offered by UAE banks are as follows:
Besides conventional banking, UAE also offers Islamic banking which has witnessed tremendous growth in recent years.
|Savings accounts||Payment and transfers – Most liquid assets|
|Current accounts||Cheques for day-to-day payments (overdraft facilities available depending on the credit standing)|
|Time deposits||Steady returns with comparatively higher interest rates, wide range of currencies and tenors|
The Central Bank of the UAE is the banking regulatory authority in the country and its main responsibility is formulation and implementation of banking, credit and monetary policies. UAE’s currency, the Arab Emirate Dirham, is pegged to the United States Dollar at a fixed rate of AED3.673: US$1. Additionally, the Dubai Financial Services Authority (‘DFSA’) is the regulatory authority for entities including banks, investment banks, asset managers established in the free-zone, Dubai International Financial Centre (‘DIFC’). The DIFC is the financial and business hub connecting the Middle East region’s emerging markets with the developed markets of Europe, Asia and the Americas. Since its launch in 2004, DIFC, a purposely built financial free zone, has been committed to encouraging economic growth and development in the region through its strong financial and business infrastructure, which makes it the destination of choice for Financial Services firms establishing a presence in the region.
Granting credit facilities to a customer varies according to the customer’s credit standing, as well as the credit appetite of banks. A number of factors are considered by a bank prior to the granting of the credit facilities, including the following:
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