Banking System of the UAE – Useful Facts and Benefits
The UAE is one of the most favorable countries for doing business. Information about the banking system is useful to those who plan their business in this country.
The Central Bank of the UAE was established in 1980. As in many other states of the world, its main task is to prevent the economy of the country from falling. Central Bank is also controls prices and inflation and is in charge of the government’s gold funds.
Concerning other types of banks in the UAE, there are four main kinds, namely:
- Commercial banks;
- Merchants/investment banks;
- Islamic banks;
- Industrial banks.
Islamic banks are now becoming more and more influential. This type of bank implies that business is to be done in accordance with the religious rules. Here is the list of the main features of Islamic banking:
- There is no borrowing rate as nobody’s straits can be used to somebody’s benefit;
- Economic activity of the bank cannot be related to the area which is considered immoral or unethical from the point of view of religion (such as gambling, alcohol and tobacco consumption etc.).
Islamic banking becomes more and more popular and widespread even outside the Islamic world (including some European countries).
Commercial, investment and industrial banks have different areas of focus and activity. A commercial bank provides money for commercial activity, giving loans and managing accounts of individuals and enterprises while industrial banks support productive activities. Investment banks are engaged in the buying and selling of stocks.
Apart from the locally registered banks, there are 28 foreign banks In the UAE banking system with 115 branches in the UAE. The taxation system for local banks is a little different than for foreign branches. Local banks are exempt from taxes while foreign ones have to pay 20% tax on their profit.
The biggest banks in the United Arab Emirates (in Dubai and Abu Dhabi):
- Dubai Islamic Bank (DIB).
- National Bank of Abu Dhabi (NBAD);
- Abu Dhabi Commercial Bank (ADCB);
- Emirates NBD;
- First Gulf Bank (FGB);
If you want to open an account in one of these banks you must send a standard set of documents and go through a simple procedure. To stay on the safe side, you can contact one of the consulting agencies that will assist you.
The majority of the money transfer procedures are carried out with the help of the Hawala System, one of the key financial system participants.