Up to 1,600 UAE citizens have signed up for a AED1bn (US$410m) government-backed personal debt settlement scheme, the Gulf state's deputy prime minister said.
Speaking at the Government Summit in Dubai, Sheikh Mansour bin Zayed said Emirati nationals were "blindly" signing up for personal loans that they were unable to pay back later, leading the government to create a personal debt bail out scheme.
“A loan is a dilemma, do not get into it. You should be careful when it comes to personal loans,” he said. “The banks are taking advantage of the unawareness of some Emiratis who blindly sign on the contracts.”
Last year, UAE authorities set aside AED1.05bn (US$410m) for the Nationals' Defaulted Debts Settlement Fund, a programme aimed at clearing defaulted debts owed by Emirati nationals.
Under the directive, rescheduling of loan repayments by indebted citizens will not exceed 50 percent of their monthly salaries, while banks have agreed to cut interest on monies owed by 1 percent.
Sheikh Mansour said the fund had dealt with approximately half of the 3,200 registered Emirati applicants. “There is a lot of confusion about the law; it is simple and clear. Any person that with personal loan debts and not commercial or trade loans unpaid before December 2011 will have it covered by the programme.”
The 17 banks taking part in the fund include are National Bank of Abu Dhabi Bank, Abu Dhabi Commercial Bank, First Gulf Bank, Abu Dhabi Islamic Bank, Union National Bank and Al Hilal Bank.
“The agreements endorse mechanisms for settling defaulted loans owed by nationals against whom courts of law have passed judgments or cases are pending,” a statement read.
Authorities in November freed around 290 Emiratis who were jailed for bouncing security cheques, considered a crime in the UAE. They have been presented with certificates to protect them from any future prosecution while citizens in similar situations should report to the Public Prosecution to receive their certificates, state news agency said.