The Abu Dhabi Commercial Court has dismissed a bank’s lawsuit against a customer who defaulted on two credit cards worth Dh489,840, after finding that the bank breached lending regulations by granting credit far beyond the borrower’s income. While rejecting the bank’s claim related to the credit cards, the court ordered the customer to pay Dh316,997 for an unpaid Islamic financing (Murabaha) loan, along with Dh1,000 in compensation for delayed payment. Court documents revealed that the customer held multiple credit facilities, including two credit cards with combined limits exceeding 20 times his monthly salary of Dh16,862. The court ruled that the bank failed to obtain sufficient guarantees or post-dated cheques, violating Central Bank regulations that restrict personal loan amounts to a maximum of 20 times a borrower’s income. The court emphasized that the bank’s own evidence confirmed the lack of proper guarantees, rendering its credit card claim inadmissible. However, it upheld the bank’s right to recover the outstanding Murabaha loan. The decision reinforces the court’s strict application of Central Bank rules and underscores the need for financial institutions to practice responsible and compliant lending.
