The no liability letter is a confirmation that is signed by the bank official and issued by the bank stating there is no payment amount liable to be paid by the account holder. The letter of no liability is an indication that the account holder is not responsible for the payment of any amounts to the bank. There is a risk clearance certificate issued by the bank to the borrower.
No liability letter is issued by the bank that there is no liability on the account holder. It indicates that the account holder has paid off the loan or paid off all the credit card dues to the bank. This letter can be used by the borrower and sent to the clients ensuring that there is no risk of dealing with the activity. The clients cannot hold responsibility for the dues of the past.
How to apply for a no liability letter?
You can request the bank for a no liability letter and the bank will provide you with the certificate. Visit the nearest bank branch and submit your application form. Alternatively, you can also call the bank call center or submit an application through online banking. On successful completion of your application, the bank will send you the reference number. This reference number can be used to track the progress of your request.
No liability letter and Credit reports
It is very important to check your credit report from the Al Etihad Credit Bureau(AECB). You can collect the report from the bureau to find out the outstanding balances. The minimal charges such as Dh 70 for short reports and Dh110 for detailed reports will be collected by the bureau.
The customer can know if the bank had submitted the report to the credit reporting agency. Once the report is submitted the latest developments are updated on the credit report and it will show the loan has been paid off and the credit score will get updated.
If there is an auto loan then they should get their vehicle release clearance report from the roads and transport authority. This is very important to avoid any hassles when you are driving on the road or meet with an accident. The customer while paying the loan amount should clear with the bank for payment of all dues including the residual amount.
The clearance certificate is a legal document that your credit card dues or loan has been paid off. This document will assist you in avoiding any disputes with the lender in the future. A credit report is a more reliable document to check the customer history. It is suggested to the customers to get a no liability letter from the bank and also check the credit report. If there are any discrepancies you can rectify the differences and errors shown on the credit report.
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Importance of no liability letter
Legal and financial experts suggest that UAE residents should get no liability letter from the bank once the loan has been paid off or the credit card dues have been fully paid off and canceled. This is like a clearance certificate from the bank that there are no dues pending on the customer and the customer is free from all bank liabilities.
There have been instances in the past when the customer has been detained at the immigration desk. There were also a few instances when the customers had difficulties in getting the property registration successfully.
There have also been instances where the name of the borrower has been shown in the defaulters’ list though they had cleared the loans. It is only when the bank gives clearance the customer will be declared free from the liabilities. Hence having a no liability certificate is very important.
Some bank customers also had difficulty during property registration where the bank records indicate that loan payment is not clean and also the credit card dues. Many customers do not realize the importance of getting the “No Liability Certificate” from the bank.
They ignore or delay in getting the no liability certificate from the bank. Banks may take time in updating the records and in the meantime, the authorities having access to the financial records will follow rules.
The responsibility of the customer does not end when the loan is paid off, it will end when they collect a no due certificate or no liability certificate from the bank. No liability certificate is a formal clearance from the bank that the loan is fully paid off and cleared.
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Issuance of no liability certificate
No liability certificate will be issued by the bank upon the customer’s request. The customer has to visit the bank or apply online for the no liability certificate. Bank will take a standard of 7 business days to issue the certificate.
Different banks have different timelines and since the advent of online banking, some banks provide instantly once all the documents are submitted. Some banks will levy charges for issuing the certificate while some banks will provide it free of cost.
About the author
Vinay Kumar Goguru is a finance professional with more than 8 years of diverse experience as a researcher, instructor and Industry work experience with both public and private entities. Prior to MyMoneySouq, he spent 6 years in Berkadia, It's a commercial mortgage banking company. He has a "Doctoral Degree in Commerce" and two master's degrees with a specialization in Finance, one as Master of Commerce and other as Master of Business Administration. He has written several articles on personal finance, published by different International journals. He loves traveling, reading and writing is his passion. He has a dream of writing a book on his favorite finance topics.
