{"id":87527,"date":"2024-01-03T00:00:00","date_gmt":"2024-01-03T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/uae\/new-regulations-for-short-term-credit-amid-rising-demand-for-bnpl\/"},"modified":"2024-01-03T00:00:00","modified_gmt":"2024-01-03T00:00:00","slug":"new-regulations-for-short-term-credit-amid-rising-demand-for-bnpl","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/uae\/2024\/01\/03\/new-regulations-for-short-term-credit-amid-rising-demand-for-bnpl\/","title":{"rendered":"New regulations for short-term credit amid rising demand for BNPL"},"content":{"rendered":"<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"> <strong>BNPLs need to get approval from the CBUAE to offer credit: <\/strong>The Central Bank of the UAE (CBUAE) has introduced a new regulatory framework for short-term credit facilities, with new <a target=\"_blank\" href=\"https:\/\/rulebook.centralbank.ae\/en\/rulebook\/finance-companies-regulation-0\" style=\"\" rel=\"noopener\">amendments<\/a> to the country\u2019s Finance Companies Regulation, according to a CBUAE <a target=\"_blank\" href=\"https:\/\/ent.news\/2024\/1\/116.pdf\" style=\"\" rel=\"noopener\">statement<\/a>. The new provisions come in response to \u201cglobal shifts in consumer financial trends\u201d and increased demand for buy now, pay later (BNPL) and similar credit products, the statement says. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>SOUND SMART-<\/strong> Short-term credit refers to credit that is provided for a period of a year or less, without interest and without a need for collateral, according to the amendments. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>The fine print<\/strong>: <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>#1- Agents of licensed banks or finance companies will need approval from the CBUAE to offer short-term credit<\/strong>, while entities looking to offer short-term credit will need to be licensed as \u201crestricted license finance companies\u201d or to partner with finance firms or bank agents.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>#2- Short-term credit is capped at AED 20k<\/strong> or the total of three months\u2019 worth of net income of the borrower, whichever is lower, and any amount above AED 5k will require validation on the borrower\u2019s credit information with the Credit Information Agency.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>#3- No interest can be charged on short-term credit<\/strong>, and any fees \u2014 including late payment fees \u2014 should be capped at 30% of the original credit amount.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>#4- Restricted license finance companies must extend short-term credit within a maximum of a year<\/strong> after receiving the license. <\/p>\n","protected":false},"excerpt":{"rendered":"<p>The framework lays out regulations for companies looking to extend short-term credit in the UAE<\/p>\n","protected":false},"author":1,"featured_media":87528,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"newspack_ads_suppress_ads":false,"newspack_popups_has_disabled_popups":false,"newspack_sponsor_sponsorship_scope":"","newspack_sponsor_native_byline_display":"inherit","newspack_sponsor_native_category_display":"inherit","newspack_sponsor_underwriter_style":"inherit","newspack_sponsor_underwriter_placement":"inherit","ep_exclude_from_search":false,"_primary_brand":0,"newspack_featured_image_position":"","newspack_post_subtitle":"","newspack_article_summary_title":"Overview:","newspack_article_summary":"","newspack_hide_updated_date":false,"newspack_show_updated_date":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1561],"tags":[159,158,157,7,79,160],"brand":[],"newspack_spnsrs_tax":[],"class_list":["post-87527","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-regulation-watch","tag-banking","tag-bnpl","tag-central-bank-of-the-uae","tag-enterpriseam-uae","tag-fintech","tag-regulation-watch","wpautop","entry"],"acf":{"mongo_id":"cc1aadd8-9015-4193-aad1-32af782bdf28","is_powered_by":false,"story_type":"1","photo_url":"https:\/\/ent.news\/2024\/1\/132.jpg","photo_position":"above","homepage_title":"","full_issue_title":"Entities must secure CBUAE approval for short-term credit offerings under new framework","related_issue":[87513],"teaser":"The framework lays out regulations for companies looking to extend short-term credit in the UAE","voice_url":"https:\/\/s3.us-east-1.amazonaws.com\/ent.news\/audio\/2024\/1\/.6fb411a5-50a5-4257-87b2-1520fdaf14be.mp3"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.1 (Yoast SEO v27.1.1) - 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