UAE: Abu Dhabi court rejects bank claim over Dh489,840 credit card debt

Abu Dhabi: The Abu Dhabi Commercial Court has dismissed a lawsuit filed by a bank against a customer who defaulted on two credit cards totaling Dh489,840, ruling that the bank had violated lending regulations by extending credit far beyond the borrower’s income, Emarat Al Youm reported.

While rejecting the credit card claim, the court ordered the defendant to pay Dh316,997 for an Islamic financing (Murabaha) loan he had not repaid, along with Dh1,000 in compensation for delayed payment.

Documents show the customer had multiple facilities, including two credit cards with combined limits over 20 times his monthly salary of Dh16,862. The court found the bank failed to secure adequate guarantees or post-dated cheques, violating Central Bank rules that cap personal loans at 20 times income.

The court noted the bank’s evidence confirmed insufficient guarantees, ruling the credit card claim inadmissible while upholding its right to recover the Murabaha loan.

The ruling underscores the court’s strict adherence to Central Bank guidelines and highlights the importance of responsible lending practices by financial institutions.