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UAE Central Bank removes minimum salary requirement for personal loans
Industry analysts expect the change to drive new lending options tailored to low-income and entry-level workers
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.
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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.
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Significant shift
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 earns 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.
Risks of default
Faris Ali, Managing Director at Jawab Economic & Management Consultants, described the move as part of broader expansionary regulatory reforms aimed at increasing liquidity in the market through consumer activity.
“With two-thirds of the workforce now gaining access to financing, we can expect increased consumption to feed directly into the economy and support higher GDP output.”
Ali added that while banks will open lending opportunities within their risk appetite, competition is likely at the outset as institutions seek to build market share. However, he cautioned that borrowers should fully understand the risks of default and take personal loans only when required for essential needs or emergencies.
“First-time and low-income applicants should carefully assess the necessity of debt before committing. Financing should be taken only for necessities, emergencies, or calculated investments,” he said. He also advised borrowers to consider takaful protection alongside their loans to provide coverage in the event of job loss.
Azza Al Ali
Azza Al Ali is a reporter from Ras Al Khaimah, dedicated to sharing stories that bring the community’s voices to life. She’s passionate about connecting with people and highlighting what truly matters to them.
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