On Sunday, the Central Bank of the United Arab Emirates (CBUAE) released a regulation for small and medium-sized businesses (SMEs) to encourage best practises among licensed financial institutions (LFIs) when dealing with SMEs.

The regulation aims to make financial services more accessible to small businesses.

By specifying their responsibilities when dealing with SME customers, this regulation aims to foster a practice of dealing with SMEs within LFIs. LFIs can set business and market conduct standards, improve governance and supervision over the design, marketing, and selling of financial products and/or services, and encourage responsible financing practices.

“Small and medium-sized enterprises (SMEs) play an important role in the UAE's economy. The UAE government has put a high priority on improving the SME ecosystem and eliminating barriers to an open, enterprising, and creative SME sector in the UAE, with easy access to a variety of financial resources,” said Abdulhamid M. Saeed Alahmadi, governor of the UAE Central Bank.

“In line with our new consumer protection mandate, the Central Bank of the UAE aims to ensure that SMEs benefit from the highest market standards when working with licensed financial institutions. This legislation will make it easier for SMEs to access best-in-class products and services,” Alahmadi said.

The regulation advances the CBUAE regulatory agenda by establishing criteria for LFI market conduct, strengthening management oversight of the design, marketing, and sale of financial products and services, and encouraging prudent lending practises and risk disclosure. It also gives SMEs timely and reliable information so they can make informed decisions, creates consistent processes for addressing grievances from SMEs, and mandates suitable debt counseling.

LFIs must ensure that the opening of a bank account for an SME is done within 3 working days, provided that LFIs perform the required due diligence related to financial crime compliance and that SMEs pose little risk of money laundering or terrorist financing.

LFIs must also set up an independent and efficient complaints management function to ensure equity, accountability, and neutrality in the resolution of complaints, as per the regulation.

The regulation aims to increase SMEs' access to financial products and services. The implementation of this regulation comes after the launch of the central bank's new Financial Consumer Protection Regulatory Structure.

“SMEs are critical to the UAE's economy. The UAE government has put a high priority on developing the SME ecosystem and eliminating barriers to an open, entrepreneurial, and progressive SME sector in the UAE, with easy access to a variety of financial resources,” Alahmadi said.