The Abu Dhabi Commercial Court (First Instance) has dismissed a bank’s lawsuit against a customer who defaulted on a personal loan of Dh629,223, ruling that the lender violated mandatory lending regulations.
The bank sought to compel the borrower to repay Dh629,223, plus 12% default interest, 5.14% contractual interest from the date of the loan, and legal fees.
The borrower had taken out the loan in January 2024 but allegedly stopped paying installments.
The bank submitted the loan agreement, account statements, a cheque, and a salary certificate as evidence.
In its ruling, the court cited Central Bank regulations for personal loans and retail banking services, which limit the value of a personal loan to no more than 20 times the borrower’s monthly salary or income. Banks are also required to obtain adequate guarantees to secure such loans.
Court documents showed the borrower received a personal loan of Dh650,000, secured only by his salary. With a net monthly income of Dh16,947, the legal maximum loan he could receive was Dh338,940, exactly 20 times his salary.
By lending Dh650,000, the bank exceeded the legal limit and failed to secure multiple post-dated cheques as additional guarantees.
The court concluded that because the bank breached lending rules, its claim could not be admitted.
