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Dubai - national banking system

Dubai - national banking system

Speaking about the banking system of the Emirate Dubai in the UAE, it should be noted that the national Central Bank is the reputable structure that performs several key functions in the economy of the Emirate. Besides the fact that it is the bank of the first level and it exercises the supervision and control over the banking institutions which are represented in the local financial market, the Central Bank finances and provides the advisory support to the Government of the Emirate.

The competence of the Dubai Central Bank includes the activities for the development and inculcation of the modern banking, monetary and credit policy, which contribute to the achievement of the strategic objectives in the national economy of the country, among which there are the support of the convertibility of the national currency and provision of the stable prices formation.

The Dubai Central Bank: legal framework and powers

The Central Bank carries out its activity in accordance with the rules of the legislative act No. 10 of the 11th from December, 1980. The purposes of the Bank institution are stated in the fifth article of the Act and are as follows: the Central Bank should regulate monetary and banking policy and also to supervise the compliance of these policies with the overall national policy.

To ensure the goals and to support the national currency and the economy, the Central Bank is vested with the following powers:

  • Carrying out the functions of the authority issuing the national currency;
  • Ensuring the convertibility of the national currency and adequate support both within the country and abroad;
  • Implementation of the credit policy which contributes to the economic growth of the Emirate;
  • To inculcate the modern standards in the banking sector and to exercise the control over its effectiveness;
  • To exercise the functions of the Government Bank within the frameworks which are defined by the current legislation;
  • To provide the Government of the Emirate with the consulting support on the monetary and financial matters;
  • To provide the feasible support to the gold and exchange currency reserve of the country;
  • Intermediation of the financial interests of the Emirate in the international financial organizations, including the International Bank for Reconstruction and Development and the International Monetary Fund.

Dubai: foreign and local banking institutions

The banking institutions and agencies which operate on the territory of the Emirate can be divided into two separate categories, respectively:

  • Local banking institutions;
  • Foreign banks which had received the appropriate state license.

It is known that the Dubai Central Bank uses relatively strict policy regarding the licensing of the foreign and local banking institutions, and implements high requirements to the provision of the banking services. Due to this approach, the local financial market is represented only by reputable, time-tested financial institutions, which provide a full range of banking services for business.

UAE: features of the banking system

In the countries of the Middle East, Africa and Asia, the informal system of financial accounts, the so-called “Hawala”, is practiced. This system allows to carry out all the banking operations and transactions by fax, telephone banking or e-mail.

It is important to note that the system "Halawa" is actively used when transferring the funds of the foreign labor. The position of the United Arab Emirates in respect of this system is clear – active regulation and prevention of abuse. But, still, the UAE Government does not intend to discourage or prohibit this practice which developed over many years. To achieve these goals, the Government of the UAE is actively cooperating with the International Monetary Fund and other international financial institutions.

The Central Bank carries out a number of activities which are aimed at regulating the "Halawa" system. In particular, the operators who act in the system are issued a state license for carrying out the legal commercial activity. At the same time, they must inform the authorities of the Emirate, in the case of the carrying out the questionable transactions and operations.

UAE: credit and banking institutions

We offer to your attention the list of the largest banks and credit institutions which are represented in the financial market of the Emirates.

Local banking institutions:

  • Union National Bank;
  • National Bank of Abu Dhabi;
  • The National Bank of R. A. K;
  • Abu Dhabi Commercial Bank;
  • Commercial Bank of Dubai;
  • Emirates Islamic Bank;
  • Abu Dhabi Islamic Bank;
  • Dubai Islamic Bank;
  • Mashreq Bank;
  • Emirates NBD Bank;

Foreign missions:

  • National Bank of Bahrain;
  • National Bank of Kuwait;
  • Credit Agricole Corporate and Investment Bank;
  • Arab Bank;
  • Bank of Baroda;
  • HSBC Bank Middle East Limited;
  • BNP Paribas;
  • Al Ahli Bank of Kuwait;
  • Arab African International Bank;
  • Habib Bank Ltd.;
  • Citibank;
  • Standard Chartered Bank;
  • Lloyds TSB Bank;
  • Blom Bank France;
  • United Bank Ltd.;
  • The Royal Bank of Scotland;
  • Doha Bank.

Dubai: opening a Bank account

Opening a corporate or personal bank account in the UAE has its own peculiarities and specifics. For instance, to open the account, the client must personally come to the appropriate institution or branch of the Bank.

The local banking institutions and foreign representative offices provide a full range of banking services, including opening the multiple currency accounts, remote access to the bank account and issuing the bank cards.

The advantages of the banking system in the Emirates

On the background of the increasing pressure from the strongest world powers on the offshore and tax free jurisdiction, both in Europe and in Asia, the banks in the UAE gain the enormous popularity among the potential foreign investors and entrepreneurs. Today, when even the Swiss financial institutions cannot ensure the confidentiality of banking information, this issue becomes particularly acute for business. The United Arab Emirates, which have a strong national economy and do not depend on the international financial institutions, remain a great alternative.

Several key advantages can be singled out among the main advantages of the modern banking system in the UAE, in particular:

The guaranteed confidentiality of banking information:the Emirates are not the parties to the Hague Convention and other similar international agreements. The local and foreign banks are prohibited to divulge the information about the ultimate beneficial owners of the accounts and depositors. Emirates have neither political nor financial dependence on the other states or international organizations.

Stable public policy:it is not a surprise that the Emirate Dubai is already recognized as the new Switzerland. International trade and tourism, industry and agriculture actively develop in the Emirate. The peculiarities of the Arab mentality and hospitality eliminate the possibility of any disturbances and riots. All this became possible thanks to the competent and thoughtful public policy.

The absence of the state currency exchange control:financial institutions, which are represented in the Emirate, do not demand from their clients to justify the large transactions. As the state system eliminates the taxation of business, there is no necessity of the implementation of the currency exchange control by the state. The Bank account verification is possible only in the case of suspicion transactions.

Stable and modern banking system:in the whole history of the national banking institutions there was no case when the local bank went bankrupt. First of all, it is due to the stringent requirements of the Central Bank to the financial business. The local culture does not accept such a concept as a debt. Debts in the UAE can become the reason of serious problems, ranging from the financial penalties to the imprisonment. That is why all the credit and banking institutions must have sufficient capital to survive even the crisis.

Contact our staff if you plan to open your bank account in Dubai. Our experts will provide you with legal advice and consulting support, and also will help you to find a banking institution that meets all the needs and goals of your business.

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