Banking in the UAE

Updated time: 08 Jan, 2019, 19:12 (UTC+08:00)

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.

Banking in the UAE

Account types

The most common account types offered by UAE banks are as follows:

Foreign currency accounts can be held by residents domestically and abroad. Accounts in domestic currency (AED) can be held in domestic banks’ overseas affiliates and are freely convertible into foreign currency.
Non-resident bank accounts UAE denominated in domestic currency (AED) are permitted in the UAE, as are accounts in foreign currencies belonging to non-resident banks and financial, industrial and trade companies. Non-resident accounts in domestic currency (AED) are freely convertible into foreign currency.
Interest is generally offered on savings accounts and time deposit accounts.

Besides conventional banking, UAE also offers Islamic banking which has witnessed tremendous growth in recent years.

Type	Features
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

Banking Authority

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.

Access to local financing (e.g. local lending)

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:

Nature of the business activity;
Legal status of the establishment;
Establishment’s business history in the UAE;
Financial position and future prospects of the establishment; and
Management. Key documents required by banks in order to open accounts are as follows:
Copy of valid trade licence or certificate of incorporation;
Copy of the power of attorney or Board resolution;
Passport copies, including resident permits, of key people; and
Copy of valid chamber of commerce registration certificate (mainly for limited liability companies and branches of foreign companies).