UAE banks are gradually making their way into the micro-finance sector by introducing short-term loans specifically tailored for blue-collar workers who typically wouldn’t qualify for traditional loans.
These loans address a growing demand for small, immediate funds, providing workers with much-needed financial support for urgent needs while ensuring repayment is made promptly.
RAKBank has emerged as a key player in this space, offering loans to customers with monthly salaries ranging from Dh750 to Dh4,500. “Customers can borrow up to 50% of their salary, with a maximum limit of Dh1,500,” said Raheel Ahmed, CEO of RAKBank.
“The loan amount is credited directly to the customer’s wage card, allowing them to manage emergency expenses. The loan is then repaid with the next salary deposit.”
This initiative not only offers financial relief to workers but also helps them avoid the high-interest rates often associated with private lenders in their home countries.
Other UAE banks are also exploring the potential of micro-lending, recognizing its untapped opportunities. Historically, the banking sector has focused on long-term loans for white-collar professionals, but this focus is beginning to shift.
Analysts suggest that single-owner businesses and freelancers in the UAE could greatly benefit from micro-finance, as not all require large loans or operate within the tech startup ecosystem.
Fintech companies are also eyeing this market, with the potential to offer similar lending services if they secure the necessary regulatory approvals. They may even partner with local banks to expand their reach.
For RAKBank customers, salary advances can be requested and approved instantly via the C3 Pay App, without the need to visit a branch. “Ease of use is key,” added Ahmed.
“The app supports multiple languages and includes audio and video content to ensure customers fully understand the product features and charges.”
This move marks a significant step in broadening financial inclusion for blue-collar workers in the UAE, providing them with accessible and manageable financial solutions.