Authorities in the UAE have set aside AED1.05bn (US$410m) to clear defaulted debts owed by Emirati nationals, state media reported on Monday.
In a statement on the WAM news agency, the Higher Committee of the Nationals' Defaulted Debts Settlement Fund approved the sum following a directive by the Gulf state’s president HH Sheikh Khalifa bin Zayed Al Nahyan.
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.
The WAM statement did not indicate how many Emirati nationals were eligible for the scheme, but said the decision followed proposals made by six major lenders based in the Gulf state.
The banks taking part 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.
Last month, the UAE federal government said it had signed up four more banks up to a debt settlement scheme for Emirati personal loan defaulters in the Gulf state's latest move to decriminalise bouncing security cheques for citizens.
Sharjah Islamic Bank, Noor Islamic Bank, HSBC and Arab Bank for Investment and Foreign Trade all signed up to the Debt Settlement Fund for UAE nationals, taking the total number of lenders to 17, state news said.
“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 on WAM 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.
UAE President Sheikh Khalifa Bin Zayed Al Nahyan in May allocated around AED5m to settle defaulted loans for each indebted citizen. In August, the Central Bank ordered lenders to extend maturities on personal loans held by Emiratis by more than four years.