UAE banks may face new rules governing customer loan transfers between banks from January 1, 2027. Under the proposed framework, borrowers would be required to remain with their original bank for a specified period and make a set number of instalment payments before transferring their debt to another bank.

Banking sources said the changes are intended to reduce frequent switching between banks by customers seeking competitive financing offers and to promote greater stability in lending relationships.

What Would the New Loan Transfer Rules Require?

A banking source who requested anonymity said that if the proposed rules are approved, borrowers would have to remain with their lender for a specified period before applying to transfer their debt.

The rules would also specify the number of instalments borrowers must pay before transferring a loan.

However, the waiting period, minimum number of instalments, possible exemptions and scope of the rules have yet to be determined. It also remains unclear whether the restrictions would apply only to personal loans or extend to other banking obligations.

Banks Compete to Attract Customers

Ahead of the potential changes, competition among UAE banks to attract customers seeking to transfer their loans has intensified.

Some banks are offering reduced interest or profit rates, restructured monthly instalments and deferred repayment start dates.

According to banking sources, some offers provide payment deferral periods of 7 to 12 months for UAE citizens and 6 to 9 months for expatriate residents.

However, depending on the contract terms, these deferral periods may increase the overall cost of borrowing or extend the repayment term.

Current Loan Transfer Rules in the UAE

Under Article 20 of the UAE banking regulations and its amendment, personal loans may be transferred to another bank upon payment of an early settlement fee.

The fee is capped at 1 per cent of the outstanding balance or AED 10,000, whichever is lower. The bank taking over the loan must also comply with the Central Bank’s credit requirements.

However, the new restrictions have not yet been officially confirmed, and the proposed implementation date of January 1, 2027, is not final.

Final details will be announced once official guidelines are issued.