UAE banks set to introduce new rules on loan transfers from January 2027

Dubai: The UAE banking sector is moving towards introducing new regulations governing the transfer of customers' outstanding loans between banks from January 1, 2027, requiring borrowers to remain with their original lender for a specified period before switching to another bank, according to a banking source quoted by Emarat Al Youm.

The proposed measures would require borrowers to make a minimum number of instalment payments before transferring their outstanding debt to another lender, the source, who requested anonymity, said.

The move is aimed at regulating customer transfers and curbing frequent switching between banks to take advantage of competing financing offers.

The source said the proposed rules, if approved, would establish a clearer framework governing how long borrowers must remain with their original lender before applying to transfer their loans.

The measures are expected to discourage customers from switching banks shortly after obtaining financing, while promoting greater stability in lending relationships.

"The proposed measures are expected to reduce practices involving the repeated closure and refinancing of loans over short periods, along with the associated administrative procedures and financing costs," the source said.

"They would also strengthen banks' ability to plan their loan portfolios and manage associated risks."

Different financing arrangements

According to the source, the proposed regulations would take into account different types of financing and borrowers' circumstances.

They are expected to clarify how the mandatory waiting period would be calculated, the minimum number of instalments required and any potential exemptions.

The rules would also specify whether the restrictions apply solely to personal loans or extend to other banking liabilities.

Banks compete for borrowers

The anticipated changes come amid intensifying competition among UAE banks to attract customers seeking to transfer existing loans and financing arrangements.

Since relevant banking departments were informed of the proposed measures, lenders have been offering incentives including lower interest rates or profit margins, restructuring of monthly repayments and grace periods before instalments become payable.

Some offers provide repayment deferrals ranging from seven to 12 months for UAE nationals and six to nine months for expatriates.

However, such arrangements may increase the overall cost of borrowing or extend repayment periods, depending on contractual terms.

Borrowers are therefore advised to compare their total financial obligations rather than focusing solely on lower monthly instalments or temporary repayment holidays.

The source stressed that the final details of the proposed regulations, including the mandatory waiting period, minimum instalment requirements and implementation date, remain subject to official confirmation.

The scope and potential impact of the measures on the UAE lending market will become clearer once the relevant regulatory instructions are formally announced.