UAE Central Bank introduces framework for regulating 'Buy Now Pay Later' credit facilities
Increasing demand for zero-rate facilities has led to the framework creation
Abu Dhabi: The Central Bank of the UAE has brought out an amended Finance Companies Regulation, done with the express intent to regulate the mushrooming 'Buy Now Pay Later' offers. The regulation will also extend to other short-term credit facilities, according to WAM.
Under the new framework, the provision of short-term credit can be carried out by entities operating as agents of licenced banks or finance companies - and only after approval from the Central Bank. Entities can also carry out this activity upon being licenced as 'Restricted Licence Finance Companies'.
Unlicenced entities which carry on any form of short-term credit activity and intend to continue to carry on these activities, must 'either apply to the Central Bank to be licenced as a Restricted Licence Finance Companies or partner with a licenced finance company or a bank'.
Saudi Arabia too had brought out rules governing the licensing and operations of such BNPL entities.