UAE clarifies Nafis rules affecting bank loan eligibility / Image: @centralbankuae
The Central Bank of the UAE has formally clarified that Nafis payments and incentives are time-limited, conditional and cannot be relied upon as guaranteed income when assessing loan eligibility, though banks may consider them on a strict case-by-case basis under clear rules.
UAE: Nafis isn’t stable income for loans
Mohamed bin Hadi Al Hussaini, Minister of State for Financial Affairs, confirmed that the CBUAE views Nafis incentives primarily as government support designed to encourage citizens to join the private sector. However, this support does not fully satisfy the CBUAE’s regulatory requirements for consistency and continuity, as defined in Article No. 2 of the personal loans regulation (issued in 2011).The Central Bank’s definition of verifiable income for a personal loan requires that the income source must be:
- Stable and regular.
- Consistent and verifiable.
- Likely to continue throughout the entire loan repayment period.
Since the Nafis financial support is an incentive with a specific structure and duration, it does not meet the necessary criteria to be classified as reliable, long-term fixed income in the eyes of the regulator.
Debt-burden ratio (DBR) dilemma
This clarification has a direct and limiting effect on the creditworthiness of Emirati private sector employees, especially when calculating their Debt-Burden Ratio (DBR).The Issue:
- UAE Central Bank rules mandate that a borrower’s total monthly loan and credit card installments cannot exceed 50% of their gross monthly salary and regular income.
- Federal National Council (FNC) member Sheikha Saeed Al Kaabi raised the issue, noting that for Nafis beneficiaries, their total income is split into two components: the private sector salary and the temporary government financial support (Nafis top-up).
- Because many lenders view the Nafis support as temporary, they frequently exclude it entirely from the overall income calculation. This artificially lowers the recognized total income, making it extremely difficult for Nafis beneficiaries to meet the mandatory 50% DBR threshold required for loan approval.
This situation puts Emiratis working in the private sector at a disadvantage compared to their peers in government roles, limiting their ability to obtain the financing needed for major investments like buying a home or developing a project.
What is Nafis?
Nafis (meaning “to compete” in Arabic) is a comprehensive federal programme launched in the UAE in 2021 as a key component of the nation’s “Projects of the 50” development plan. The core mission of Nafis, managed by the Emirati Talent Competitiveness Council (ETCC), is to significantly increase the number of Emirati nationals employed in the private sector, addressing a historical preference for government jobs. The programme’s primary target is to create 75,000 job opportunities for Emiratis in the private sector by 2026, while simultaneously supporting the national Emiratisation mandate that requires private companies to increase their Emirati workforce by 2% annually, aiming for a 10% overall rate. To fund this massive initiative, the UAE government has allocated AED 24 billion (approximately $6.53 billion) to provide a range of incentives that make private sector careers financially competitive and sustainable for UAE citizens.The programme offers several key financial incentives to Emiratis in the private sector. The most well-known is the Emirati Salary Support Scheme, where the government provides a monthly salary top-up to bridge the income gap with public sector roles; this can amount to up to AED 7,000 for bachelor’s degree holders and can last for up to five years. Additionally, Nafis assists with long-term financial stability by subsidizing a portion of pension contributions for low-to-medium-income Emiratis for the first five years of their employment. It also includes a Child Allowance Scheme, which grants an allowance of AED 800 per child (up to AED 3,200 monthly), and an unemployment benefit scheme to provide a safety net for those who involuntarily lose their private sector jobs.
What’s next?
Industry experts welcome the clarification as a necessary safeguard amid fast regulatory change. While consumer groups applaud expanded loan access from scrapping the minimum-salary rule, analysts say the new CBUAE guidance strikes a balance: it preserves financial inclusion while preventing systemic risk from counting temporary incentives as steady pay. Banks are expected to issue their own guidance within weeks, and regulators will monitor implementation to ensure consistency across lenders. Meanwhile, the Nafis programme itself continues as a central Emiratisation tool aimed at raising private-sector Emirati employment. Go to Source
