What are the amendments to the Central Bank Law and what is its impact?

31 January 2023

Bini Saroj

The Law No 23 of 2022 (“New Law”) amended some clauses in Central Bank Law No 14 of 2018(“Central Bank Law”). This Amendment come into effect on 2/1/2023. This Law amended the following existing provisions of the law:

• Article 69 on Application for license and its extension of its scope and

• Article 121 on Protection of customers of licensed financial institutions.

This Amendment also added New Articles:

• 121 bis on guarantees of credit facilities as well as

• 124 bis 1- Application for licensing the financial infrastructure system or expansion of its scope along with

• 124 bis 2 which talks about deciding such licensing and expansion of scope.

Clause 2 of Article 121 is the most important clause that might have an impact on the civil cases filed by the banks as according to the article, the financial institution must ensure that there are sufficient securities when they provide finance to individuals (natural persons) or sole establishments.

A case filed against any individual or sole establishment may be rejected by the court if the financial institution fails to obtain sufficient securities, this is more concerning because the Law, does not define what constitutes as “Sufficient Securities”

It is Important for the Banks and the Financial Institutions to adhere to Article 121 Clause 2, as it implies that court can reject a case in case of non-adherence. This is can already be seen in Abu Dhabi court starting from 2nd January 2023, as they have started lifting Travel Ban in execution cases citing the reason that the bank or financial institution failed to obtain “sufficient securities” under Article 121. 

It will be interesting to see how “Sufficient Funds” will be defined either due to court’s decision or resolutions issued by the ministry.

botão whatsapp
Schedule a consultation for all your legal challenges.

Call us Today

+971 50 561 6799