Pulling the cords
The UAE government is planning to introduce a unified lending system for all the banks across the country.
December 9, 2009 1:46 by Aarti Nagraj
The UAE government is now pushing for the quick creation of a unified system that will be used by banks across the country to issue personal loans. According to the Federal National Council (FNC), the amount of personal loans issued in the UAE increased drastically year on year before the crisis hit the region. Khalifa Bin Howaidin, an FNC member from Sharjah, said during a session on Tuesday that personal loans equaled AED424 billion in 2008, an increase of 53 percent compared to AED146 billion in 2007, reports Gulf News.
“The uniform personal loan application was part of recommendations approved by the House more than 18 months ago and yet it’s not ready so far,” he said. ”Obaid Humaid al-Tayer, Minister of State for Financial Affairs, promised us more than a year-and-a-half ago that a draft law would be brought out for a federal credit authority and a unified personal loan form among banks. However, his promises have not been fulfilled and many UAE nationals go to jail because they are unable to repay huge loans,” he said.
However, the Ministry of Finance is studying banks in the country to help introduce the new system, al-Tayer told the FNC on Tuesday. “Once the survey is completed, results will be presented to the board of the Central Bank for approval,” he said.
According to a report by the FNC personal loan committee, about 10,000 people are either in court or in jail because of loan defaults; it also noted a rise in defaults, from 3,149 cases in 1998 to 5,710 in 2006.
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