UAE: Dh50,000 fine, over 1-year jail for charging interest on money lent illegally

Only licensed entities regulated by the Central Bank of UAE and other competent authorities are authorised to lend money


Ashish Mehta

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Published: Sun 12 Nov 2023, 9:32 AM

Last updated: Sun 12 Nov 2023, 10:45 PM

Question: I wish to borrow some money from an acquaintance. He has agreed to extend me the loan but said I would need to pay him back the amount along with interest. Is this legally binding? If so, how?

Answer: Pursuant to your queries, the provisions of Federal Decree Law No. 31 of 2021 on the Issuance of Crimes and Penalties Law are applicable.

Only licensed banks and financial institutions regulated by the Central Bank of UAE and other competent authorities are authorised to lend money to individuals or entities on interest-based repayment options. Furthermore, it is illegal for an individual to lend money to other individuals or entities on interest. This is in accordance with Article 458 and Article 459 of the UAE Criminal Law, which states as follows:

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Article 458 of the UAE Criminal Law:

“Any person who lends another physical person a loan for an interest rate in return for late payments, and that is in any type of civil and commercial transactions, and whether said interest is explicit or implicit, shall be liable to a jail sentence for a period not less than one year and a fine not less than Dh50,000.”

The original debt and implicit interest may be proved by all means.

If the criminal makes use of the need, weakness, or inclination of the debtor to commit the crime set out in this Article, such matter shall be considered an aggravating circumstance."

Article 459 of the UAE Criminal Law:

“Any physical person who is habitually engaged in practising interest lending shall be sentenced to temporary imprisonment for a period not exceeding five 5 years and a fine not less than Dh100,000.”

Based on the aforementioned provisions of law, it will be illegal for your acquaintance to lend money to you in the UAE, on an interest basis. Therefore, you may inform your acquaintance not to collect interest from you in the event he lends money to you. Instead, you both may enter into an interest-free loan agreement, which is duly signed by you and your acquaintance along with witnesses.

Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: Readers may e-mail their questions to: or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.


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