Compound Interest in Dubai: A Discussion by Dubai Lawyers

Banking laws are important for the country to maintain economic stability and international business transactions. Banks also provide loans and credit facilities to encourage entrepreneurship in the country. However, with a bank loan comes an interest rate. When the individual has to return the loan on a given date, they have to pay extra, which is calculated as bank interest. It keeps changing with the changes in the stock market. Today, we have a discussion by Dubai Lawyers. These lawyers are most decorated and prominent lawyers all over the UAE. Let’s get back to our discussion. 

UAE Federal Supreme Court’s Judgment

The UAE Federal Supreme Court has prohibited compound interest under Sharia law because according to Islamic principles, interest is forbidden. Therefore, the Central Bank of the UAE does not allow financial institutions to charge any interest. However, the banks in the UAE follow the rules and regulations stated by the Central Bank. Banking lawyers in Dubai, have the ability to understand the banking laws, its illustrations and related laws. Though this is not necessary that just DUBAI lawyers for the Dubai related matters. Check this point with our advocates and legal consultants at Al Shaiba Advocates and Legal Consultants. 

What is a Compound Interest?

A compound interest is an earning on an interest. In 2023, the United Arab Emirates (UAE) made amendments to the Central Bank Law (CBL). As per the new banking law of the Central Bank, Article 121.4 says that the financial institutions in the UAE cannot charge an interest on compound interest. Secondly, Article 121 (bis) says that Licensed Financial Institutions are required to have adequate funds that they can give to individuals or sole proprietors. Failure to provide any security and any claims by the bank that are related to the credit facility will not be accepted. We suggest if you are reading the content from the point of view which is taking some practical or legal action then we suggest to book an online appointment with top Dubai lawyers or advocates.  

What is Adequate Security in the UAE?

The banking law in the UAE defines ‘adequate security’ that is given by the sole proprietor to the bank. It shows the customer’s income and financial position to the bank. If the bank does not obtain adequate securities, there are several consequences to it. There will be no application or argument that can be accepted by the legal experts. Failure to comply with the banking laws in the UAE, the Central Bank can impose penalties that could be administrative and financial. 

How Did the Dubai Court of Cassation Reply to Bank Interests?

The legal experts eagerly waited to hear from the Dubai Court of Cassation. They have decided to maintain the position of the interests to calculate the interests on the agreed amount of compound interest basis until the account is closed, otherwise it will be calculated on a simple basis. 

In the UAE, several emirates have adopted the new banking laws. However, Dubai Courts have a different approach to adequate security. It was decided by the Dubai Court of Cassation that Article 121 should not be applied in past cases, and so the request to apply Article 121 (bis) on the credit facility came into effect.

Abu Dhabi Court of Cassation

It was decided by the Dubai Court of Cassation that the Circulars should only concern Abu Dhabi Courts and not the Dubai courts as they stand with the legal entities of the UAE separately. Therefore the Circulars were not applied in the Dubai Court of Cassation. Unlike the Abu Dhabi Courts, the Dubai Court of Cassation understands Article 121 (bis) differently but also keeps the general rules of the UAE banking laws to maintain the banking system. 

Can Lawyers Help Me?

If you are planning to take a bank loan, always seek legal advice. You can have a lawyer to discuss the complications with the bank loan and learn about the interest rate and compound interest. Without having any knowledge about the banking system in the UAE, it would be difficult for you to start a business or even buy anything on credit from the bank. As an expatriate in the UAE, you will find banking laws different from any other country. Therefore, you will need legal assistance to understand better about the finance laws in the UAE.

Banking Lawyers in the UAE?

The banking lawyers can be your financial advisors in the UAE. Not only will they guide you about investments but they will tell you better about the types of loans that you should get from the bank.kra34.cc ссылка kra34.at зеркало kra34.cc вход kra34.at тор kra34.cc впн kra34.at официальный kra34.cc площадка kra34.at регистрация kra34.cc рабочее kra34.at актуальное pinup pinup пинап пинап kra36.cc