UAE banks to enforce mandatory loan-holding period from January 2027

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. The proposed measures would require borrowers to make a minimum number of instalment payments before transferring their outstanding debt to another lender. The move is aimed at regulating customer transfers and curbing frequent switching between banks to take advantage of competing financing offers. The proposed rules 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. They would also strengthen banks' ability to plan their loan portfolios and manage associated risks. The proposed regulations would take into account different types of financing and borrowers' circumstances and are expected to clarify how the mandatory waiting period would be calculated, the minimum number of instalments required and any potential exemptions.