UAE: How Former Residents Can Repay Loans After Retiring To Home Country

Question: I'll be retiring soon and returning to my home country, but I have an outstanding personal loan. If I have a steady income from my investments, can I continue repaying my monthly instalments from abroad?

Answer: In the UAE, when a personal loan is granted to a borrower, a lender will enter into a personal loan agreement with the borrower. This falls under the provisions of Notice No. 3692/2012 of the Central Bank of the UAE pertaining to General Terms & Conditions and Loan Agreements texts drafted and approved by Emirates Bank Association.

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Personal loans are to be repaid within a maximum period of 48 months. If a borrower retires before fully repaying the loan, the bank may restructure the remaining amount so that the monthly payments do not exceed 30 per cent of the borrower's pension or retirement income.

For existing loans, the current terms can continue, but no additional top-ups, payment deferrals, or rescheduling will be allowed unless the borrower continues to meet the standard eligibility criteria, such as the salary multiplier, repayment period, and income-based repayment limits.

This is in accordance with“Article 7 of the Regulation No. 29/2011 Regarding Bank Loans & Other Services Offered to Individual Customers.”

“1. Personal loans will be set up for a maximum tenor of 48 months. However, if a borrower retires before full repayment, his loan will be restructured from the date of retirement so that his total repayments do not exceed 30 per cent of income (or pension salary).

2. Existing loans will continue in accordance with the present arrangement and documentation. However, no top-ups, deferrals, or rescheduling will be permitted beyond eligibility in terms of salary multiplier, tenor, and repayment percentage.”

Based on the aforementioned provision of law, you are obligated to repay the instalments that are due to the lender. In the event of non-payment of instalments, your lender may file a civil case against you in a court to recover the outstanding debt. If the final judgement is not in your favour, the lender may proceed to file execution proceedings against you, and that may include a request to impose a travel ban and issue an arrest warrant against you.

Therefore, as you are travelling outside the UAE, you may approach the lender from whom you availed the loan and inform them that you are travelling outside the UAE and will not return to the UAE soon. Furthermore, you may also inform the lender that you will promptly settle the outstanding payments on or before the due date while you are in your home country. Based on the same, your lender may advise you on the payment options related to instalments to be paid to it. Generally, you may pay the loan instalments from your other bank account, which you have in your home country. Alternatively, you may choose to have a telegraphic transfer (TT) made from a bank or financial institution in your home country to the bank account with the lender and notify your lender of the same.

It is also recommended to obtain a clearance letter/no-due certificate from the lender once you pay all the instalments due to the lender related to the loan facility availed from it.

Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: Readers may e-mail their questions to: ... or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.

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