Salary advance is a facility which is provided as a temporary advance payment of salary to the employee. It is a fast solution for any emergency needs. Salaried employees who get salary credited into their account will receive this facility directly from the bank into their account. There are some conditions and eligibility criteria for getting a salary advance facility. Some banks also provide Qard Hasan and it is compiled with terms and conditions. An employee can draw salary before its credit to the bank account. Different banks have different conditions, to avail this facility you can visit the bank branch and get information about it.
What is the salary in advance?
Salary in advance is like a loan which is given to the employee. This advance payment is done based on the income which is liable to be paid to the employee in the future. It is not like a giving loan to any friends or relatives where the amount is paid in the future with no guaranteed time. Salary in advance is a pure loan which has its timeline payment, repayment terms and conditions.
The repayment structure is generally a deduction from the employee’s future salary. A full amount is deducted from salary cheque or a smaller amount of money is deducted each month from future salary.
There is quite a bit of equal importance to all the employees, there is no discrimination based on race, religion, disability and other criteria. Equal facilities should be provided to all the employees.
Features of Salary in advance
- Bank customers will enjoy this facility at 80% of salary or as per bank standards
- Salary minimum pay should be AED 5,000 or as per bank standards
- A bank customer can apply for this facility each month but it should not be more than twelve times in a year.
- Salary in advance amount which is availed should be repaid in full by the end of every month
- A transaction fee is charged for advance payment of salary. Generally, the fee is AED 300 or as per the bank standards.
Click here to know about Understanding DIB salary in advance
How does it work?
The request for salary in advance can be made to the bank. The bank will verify the details such as the history of the customer, previous debts and such as other eligibility criteria. Once all the background information is clear the amount will be credited to the account.
The net salary in advance can be withdrawn from the ATM or through the cheque from the branches. The facility can be availed monthly but full payment should be made every month end.
Salary in advance is credited in minutes and this facility can be availed 24/7 to the account holder. In most of the banks, there is no paperwork required and banks also provide free Takaful coverage which is equal to the amount taken. This is subject to a maximum amount as per the bank conditions in the event of death or permanent total disability because of any cause. The payment is subject to terms and conditions.
In the UAE, almost all the priority banks will provide this facility to the customers. All it needs is you have to get your salary credited into the account and salary will be given as advance and put into your account.
How to avail this facility?
An employee can avail salary in advance facility through any of the following ways.
- Login to your online banking and submit your request for salary in advance
- Use dedicated banking terminals
- By sending SMS from registered mobile number
- Applying through the ATM
- Visit your Bank branch office and submit your application for salary in advance
Click here for Salary slip importance
What you should know?
Salary advance is provided to individual customers who are salaried employees and whose salary is credited to the bank account. Accepting the salary in advance and providing the facility depends on the bank. The service is provided to the employees and it is subject to terms and conditions. This facility is being provided because of the employment with the employer.
If an employee changes his job, resigns from the company, relocates to another company, and the employee gets terminated then the bank will have the right to ask for any additional documents as per the bank’s individual internal process requirement.
There is a format at the bank’s desk which should be complied with, as it tracks the amounts unpaid, outstanding balance payments, tenure of the employee, previous employment details, increase or decrease in salary payment and various other details.
Salary advance facility is intended to provide additional money to the employee. The salary in advance money will be recovered once the employee salary is credited by the employer. It is usually the last day of the month or the first day of the month or as per the terms of the employer.
Bank will collect a fee for offering the service, the fee amount will be deducted from the account. The amount will be notified to the customer and also displayed in the bank branches.
The service is available for one time and a maximum of twelve times in a year and not more than that.
The amount of salary advance that bank credits will be not more than net salary and that salary amount will be subject to the maximum amount notified by the bank.
If there is any increase in salary or decrease in salary paid by the employer then that amount will be adjusted in the future draws. Banks can reduce the facility or drop the salary advance facility without prior notice to the customer.
The salary payment will be in the national currency and the bank customer cannot request for salary advance in other currency. During the time of withdrawal, if a customer wants to get in the desired currency, the bank will process as per the existing exchange rate and credit the desired currency amount during withdrawal.
If a customer breaches any of the terms and conditions then the bank will charge legal fees, interest and fees according to the bank’s policy.
The online acknowledgement or signature stands accepted of the terms and conditions of the bank. The terms and conditions are subject to laws and regulations of the UAE Central Bank and these are not contradicting with Shariah principles. In the terms and conditions if there is any inconsistency the terms which are given in Arabic shall be prevailed to extend the conflict to be redeemed.
If the bank customer defaults in making salary advance payment then the bank will have the right to collect the payment. If required it may appoint and authorise the collecting agent to collect the amounts. The agents may be appointed by the bank within the UAE or abroad to collect the bank due amounts.
Take away
Salary in advance is an excellent facility provided by the bank to customers. It provides one advance credit of salary. If customers use the amount effectively and efficiently then it will be a good benefit in the future. The salary advance if misused the bank will have its ways of collecting the payment. Salary in advance can be availed every month provided the advance payment is made during the month end.
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.
