For most UAE residents, the gratuity paid out at the end of employment is one of the more enticing benefits. Every year that stockpile of dirhams gets a little bit fatter. But until the last day of work, it simply dangles in front of you like a carrot.
Emirates NBD, the UAE's largest bank in terms of assets, seeks to unlock this elusive capital by offering personal loans against your end-of-service benefits.
Salaried customers of the bank who earn at least Dh5,000 a month can now borrow up to 90 per cent of their total end-of service gratuity. The minimum loan amount that can be taken is Dh10,000.
"The personal loan against end-of-service benefits allows customers in the medium-to-lower salary range to avail personal loans to meet their financial requirements, by considering the end-of-service benefit amount as collateral against which the customer can take a loan," says Shekhar Krishnamurthy, the head of retail assets and liabilities for Emirates NBD.
"It also, therefore, assists customers to manage their debt wisely because loan amounts cannot exceed the total benefit due to the customer."
In addition to being an account holder at Emirates NBD, applicants must also provide their passport and a salary letter from the employer. Mr Krishnamurthy adds that the service comes with a special introductory interest rate of 10.99 per cent a year, with a maximum loan period of 48 months.
"The lending policies of the bank as a matter of course are fine-tuned from time to time in line with business priorities and market dynamics," he says. "There is a demand for this product."
Releasing the capital behind end-of-service payments is becoming an increasingly common approach for consumers in need of cash.
International Swiss Debt Management (ISDM), a new company focused on working with individuals and their employers to find innovative debt solutions, often uses gratuity as a bargaining chip when trying to get their clients out of debt.
In other words, ISDM encourages companies to advance this liability before the end of the contract.
Under UAE Labour Law, once you have completed 12 months of service you are entitled to an end-of-service benefit equivalent to 21 days' pay each year. If you are on an unlimited contract, this is payable at just one-third of the standard rate. If you resign after three years, but less than five, you will receive two-thirds the standard rate.
After five years, the employee receives the full rate.
Gratuity is based on the final basic salary, excluding allowances, but including performance-related bonuses and commissions.