The Debt Panel: 'I've lost my job so can I unlock some of my gratuity to get by?'

The Abu Dhabi resident, who owes Dh114,000 on a loan, needs money to support himself until he finds a new job

Illustration by Mathew Kurian 
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I was made redundant last month and have already notified the bank. Now my account is frozen because I have a loan. Is there any way I can withdraw a small amount of money from my gratuity payment just to allow me to get by until I find another job? I am in quite a destitute situation, however, in the current situation, I am not sure how fast I can secure a new position.

My only debt is a personal loan, which I signed up for last year. The outstanding balance from the original Dh150,000 loan is Dh114,000 with monthly repayments of Dh3,800.

I asked the agent that sold me the loan if I could withdraw some money but he said the bank would not allow it.

I was made redundant because the company is cutting costs. I asked the agent that sold me the loan if I could withdraw some money but he said the bank would not allow it. I do not have any money I can use at the moment. I have asked friends if I can borrow some money but everyone is holding on to what they have during the pandemic.

I used to earn Dh7,000 a month plus accommodation working in the hospitality sector. My previous employer is still allowing me to stay in the staff accommodation until further notice. I was told I could stay for a month but there has been no update so far. 

I am from the Philippines and do not have any dependents in the UAE. My other expenses include Dh320 for my phone and I was sending between Dh2,000 to Dh5,000 for remittances when my salary was coming in. Whatever was left went towards food and toiletries for myself.

I understand and am aware of the agreement I had with the bank before I applied for the loan, but it's just a really difficult time now. I don't even know if I can go back home to the Philippines. I was told if I owe money in the bank, they will stop me in the airport and detain me. Is that true? This is why I am still trying to find a job here to pay back the money I owe and support my family back home. 

I would just like to have some money on hand to help me get by until I get another job, so how do I get the bank to consider letting me withdraw some cash? GM, Abu Dhabi

Debt panellist 1: Philip King, head of retail banking at Abu Dhabi Islamic Bank

Unfortunately, the impact of the global pandemic continues to grow, leaving many individuals with unexpected job losses. We cannot begin to understand how difficult your situation is during such a distressing time.

Firstly, it is recommended that you refer back to the terms and conditions of your loan agreement to get some clarity on your rights and obligations in this situation. Typically, loan agreements include a clause which permits lenders to allocate end-of-service gratuity payments towards debt repayment. This is done as a safety measure for the lender, ensuring that the borrower will not default on any loan repayments.

However, given the current circumstances imposed by Covid-19, banks are being encouraged to be more flexible and accommodating in these matters. The Central Bank of the UAE has introduced a Dh256 billion Targeted Economic Support Scheme (Tess) aimed at providing temporary financial relief for cash-strapped individuals, SMEs and other private businesses affected by the pandemic.

Under the Tess programme, banks and finance companies are encouraged to extend their customers’ deferrals of principal and interest, accommodate repayment holiday requests and provide debt consolidation solutions.

It is highly advisable to approach your lender, explain your current circumstances, and try to leverage from these measures. It would be helpful to provide documentation from your employer that states Covid-19 as the reason for your termination. Depending on your agreement with the bank, you can renegotiate the terms of your personal finance with reduced interest payments and a longer tenure.

While the current period may seem discouraging, we urge you to continue your job hunt. This shows your commitment to repaying your debt and reassures your lender you are taking your financial obligations seriously.

Debt panellist 2: Ambareen Musa, founder and chief executive of

It has been standard protocol for UAE banks to add a clause in the terms and conditions of personal loan contracts, which allows them to use a customer's end-of-service payment towards an outstanding loan with the bank. This payment normally includes a gratuity entitlement, final salary payment, severance package or redundancy payment, pay in lieu of notice period and unused leave. This assignment to the bank is the usual practice followed by most banks in the country, and unfortunately one that most borrowers are unaware of.

Normally, the bank would reassign the end-of-service payment if the borrower submits a request in writing and there is no outstanding loan balance remaining. However, the current situation is an unprecedented one. Although this payment offset clause has not been relaxed in the recently released financial relief measures by banks, it may be worthwhile speaking to your bank about it. Now that the movement restrictions have been eased, you can visit the bank branch and speak to a bank representative.

Assuming you have already applied for the deferred payment facility for three months, explain to the bank that you need survival money to sustain yourself until you find another job. Ask the bank if they can release the last salary component and/or airfare allowance. Based on the loan contract, some banks may only have a legal right to withhold the gratuity rather than any other payments and allowances from the employer.

As for your future job prospects in the UAE, have you looked at the Ministry of Human Resources and Emiratisation new initiative – UAE's Virtual Labour Market? Register yourself on the portal to access both temporary and permanent positions open in the country. Besides this, keep looking for roles, even part-time or freelance opportunities yourself, targeting sectors that have seen ongoing demand during this crisis such as e-commerce, logistics and delivery.

Debt panellist 3: Stuart Ritchie, chartered financial planner at AES International

The central bank permits banks to freeze accounts for various reasons, such as loss of employment, or upon receiving an individual’s gratuity payment.  It is standard practice for an employer to pay the benefit as a separate payment to salary and label it as such. The only way to have a bank account unfrozen is to submit proof you have secured new employment, by providing a salary letter from your new employer, or by paying off any outstanding debts.

There are a few potential options regarding the loan; many banks are offering various initiatives to help those affected by Covid-19.  It would be worth speaking with your bank directly about potentially deferring your loan repayments for as long as possible and exploring if there is any scope to freeze the interest being charged and temporarily stop any other fees. This will at least prevent the debt from increasing while you remain unemployed and seek alternative work.

Regarding your query about leaving the UAE and returning to the Philippines; this is possible, but you must speak to your bank before leaving the country to come to an arrangement regarding the outstanding debt. The bank can apply for a travel ban to prevent you from leaving the country. However, if they are satisfied that you will have a greater chance of securing employment in the Philippines or elsewhere, and they do not believe you intend to abscond from your debts, they may allow you to leave the country. Your chances of being permitted to leave will be greater if you have kept up to date with all previous loan payments and never defaulted in the past. Therefore, it is worth having this conversation with your bank to understand your options more fully.

The Debt Panel is a weekly column to help readers tackle their debts more effectively. If you have a question for the panel, write to