HSBC: AED20,000 monthly salary needed to get loan

Monday, 10 November 2008 5:09 PM

HSBC has raised the minimum monthly salary someone in the UAE must earn to qualify for a personal loan to 20,000 dirhams ($5,445) due to the global credit crunch, the bank confirmed to Arabian Business on Monday.

The bank said it doubled the minimum monthly salary threshold on Nov. 1 from 10,000 dirhams.

HSBC raised its threshold to 10,000 dirhams from 5,000 dirhams in early October, it said.

The bank said in a statement the new credit eligibility criteria “will ensure that customers receive loans that they can afford to repay at a time of considerable uncertainty around the world”.

Raj Madha, equity anaylst at EFG-Hermes, said HSBC might be trying to reduce its exposure to a section of the market that many see as overleveraged and other banks could follow suit given the current liquidity squeeze.

"We would expect banks to be less agressive in going after loans, particularly where the returns do not necessarily match the risks," Madha said.

The news has left customers worried about how they will afford to pay their rent.

As many landlords demand tenants pay the entire year’s rent upfront it is common for tenants to take out a personal loan and pay it off over the course of the year.

HSBC's new threshold compares to just 3,000 dirhams a month which is required to take out a loan with Standard Chartered. Have you been refused a personal loan because your bank has tightened its credit eligibility criteria? Arabian Business wants to hear from you. Email us at dylan.bowman@itp.com.

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Posted by: Ms Wayne Thursday, 13 November 2008 1:19 PM[UAE] - UAE

Well I do agree with the previous comment, "Why bother giving loans? Posted by Minaka on Tuesday 11 November 2008 at 09:13 UAE time If you earn 20K a month, most likely you wouldn't need much of a loan!! " I believe we don't need to get any loan if we are earning such amount already, unless you want to put up your own business and risk your money in it. The bank's move is not selfish in my view, instead it's helping us to avoid loans which we can't afford. In this life we should always put in mind that we should spend only what we can afford. UAE government should give the residents the consideration by revising the housing fee, so we can afford to stay nicely and to stop people from illegal sharing. This I think is the best way to help people around.

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Posted by: Chris J Wednesday, 12 November 2008 5:32 PM[UAE] - UAE

Has anyone else noticed that since the global credit crunch has become a torrent, we no longer get people ringing us trying to offer "fantastic" deals on credit cards????? There is some upsdie to have a credit crunch!

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Posted by: michael Wednesday, 12 November 2008 10:14 AM[UAE] - United Arab Emirates

The first bank account i opened in UK was with HSBC (Midland Bank) i had this account at the same branch for 40 years, then during a hard spell i was overdrawn by UKP200 ( i did not receive any current statements) they then informed me that my account was now closed ( I sent them the outstanding amount, but it made no difference ) so If you think that Banks care then you are in the wrong world.

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Posted by: Jon Wednesday, 12 November 2008 9:00 AM[UAE] - UAE

...it's what happens when you have third world banking systems

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Posted by: Me Tuesday, 11 November 2008 5:36 PM[UAE]

at the end of they day aren't they really just doing a favour by encouraging people who do earn less than 20K to get into more debt given the current credit crisis?? I wouldn't ncessarily look at it as a bad thing as they also have a business to protect. however with increasing prices int he UAE the government are going to have to put better procedures in place and review the housing prices etc... 200K for a 3 bed villa?? Landlords need to stop being so greedy and realise that not everyone is on high wages... which is a completely different subject all together

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