UAE Central Bank removes minimum salary requirement for personal loans

Vijay Valecha, November 18, 2025, Khaleej Times

A new directive from the UAE Central Bank scrapping the long-standing minimum salary requirement for personal loans is expected to widen access to credit for millions of low-income residents, financial experts have said.

Emarat Al Youm reported on Tuesday that banks have been asked to cancel the Dh5,000 salary floor that most institutions previously applied when assessing eligibility for personal financing. Instead, lenders will now be allowed to set their own minimum thresholds based on internal risk policies. Central Bank officials told the Arabic daily that the policy shift will enable all residents - particularly youth, low-income earners and labour-sector workers - to open bank accounts linked to the Wage Protection System (WPS), allowing monthly installments to be automatically deducted once salaries are transferred.

Officials described the move as part of a wider effort to strengthen financial inclusion and ensure that every individual in the country has access to essential, regulated banking services.

Vijay Valecha, Chief Investment Officer at Century Financial, called the development a significant shift for lower-income and first-time borrowers who were previously excluded from financing due to the salary threshold. He said the initiative aligns with the Central Bank’s objective of creating a safer, more transparent lending environment by steering people away from informal or unregulated credit sources. For banks, greater visibility through the WPS also offers a clearer way to assess income consistency and repayment capacity, he noted.

The impact could be far-reaching: historical labour market figures show a significant portion of the UAE’s employed population earned below Dh5,000 per month - a segment who largely could not access formal personal credit. Removing the salary condition gives this group an opportunity to start building a repayment record and eventually qualify for bigger lending products such as auto loans and home finance.

Industry analysts expect the change to drive new lending options tailored to low-income and entry-level workers, including micro-financing, emergency credit, WPS-backed overdrafts and compliant “buy now, pay later” services. Entry-level employees could also see savings-linked starter credit products aimed at improving financial literacy and habits.

Valecha added that the easing of eligibility does not remove existing consumer-protection caps, including the maximum loan size of 20 times monthly salary, repayment terms limited to 48 months, and the requirement that installments cannot exceed 50 per cent of income. Terms, rates and fees will continue to depend on individual banks, making product comparison key for applicants.

He cautioned that while salary-linked repayment lowers bank risk, borrowers must remain mindful of job-loss exposure. UAE banks are not obliged to suspend installments when an employee becomes unemployed, and unless a restructuring agreement is reached, missed payments can lead to default processes.

Source

Khaleej Times