UAE's $2.7bn debt fund signs deals with lenders

The UAE's AED10bn ($2.7bn) fund to help pay off low-income citizens' debts on Wednesday announced the signing of agreements with a number of lenders in the country.

The fund, set up by President Sheikh Khalifa bin Zayed Al Nahyan on the UAE's 40th national day, said the agreements would outline a mechanism to settle personal loans of defaulters.

The agreements were co-signed by the National Bank of Abu Dhabi, Abu Dhabi Islamic Bank, Abu Dhabi Commercial Bank, Union National Bank, National Bank of Ras Al Khaimah, Standard Chartered Bank and Mashreq Bank, state news agency WAM reported.

The fund has compiled a first tranche of 6,830 defaulters whose debts were less than AED1m.

The first tranche incurred gross debts of AED2bn to banks, WAM said, adding that the key task of the fund was to "ease living burdens on citizens who can not afford to repay their loans".

It said the fund also sought to promote the culture of saving among citizens and spur them to do that through the agreements it has created to repay defaults.

Under the debt settlement process, the debtor will be required to sign a pledge obliging him not to take loans from banks and financing houses while he is repaying installments.

Agreements between the fund and banks will remain valid until all loans are fully cleared.