Only banks and financial institutions licensed in the country can lend cash with interest in accordance with certain regulations.
A person who engages in lending money at interest is considered a crime in the UAE and is punishable by imprisonment and a fine as mentioned in Article 458 and Article 459 of the UAE Criminal Law, which stipulates the following:
“Any natural person who lends to another natural person with an interest in exchange for deferring payment, in any type of commercial transactions, will be punished with imprisonment for a period of not less than one year and a fine of not less than 50,000 dirhams, either whether this interest is explicit or hidden”.
“It will be considered hidden interest, commission or benefit of any kind required by the creditor, if it is proven that this commission or benefit does not correspond to a real legitimate benefit or service that the creditor has performed. The reality about the beginning of the debt and the hidden interest can be proven by all means. If the offender takes advantage of the need or weakness of the debtor to commit the crime provided for in this article, it will be considered as an aggravating circumstance.
However, a person can lend cash to his friends or acquaintances without interest. But it is necessary on the part of said lender to make a written agreement by the borrower related to the repayments to protect their money. However, if the borrower does not repay the loan, the lender can file a civil case. Reported Emirates Herald, news and communication agency.