The UAE needs to reform its financial laws to prevent excessive personal lending to Emirati citizens, the country's deputy prime minister said on Tuesday.
A Debts Settlement Fund, setup in 2012, currently assists Emiratis who found themselves steeped in personal debt when Dubai’s property market collapsed in 2009.
It requires banks to waive half of what they are owed by UAE citizens, with the other half settled though an AED10bn ($2.7bn) fund. Those banks that decline to take part will be named and shamed by the UAE Central Bank, and potentially be placed on a government blacklist.
However, Sheikh Mansour Bin Zayed Al Nahayan suggested that further measures could be brought in to prevent Emiratis falling into debt.
"I think we're on the way to monitoring local and foreign banks," he said. "We have a weakness in some laws and we should improve this."
So far, close to $500m in personal debt has been settled for 2,700 applicants, or about $185,000 each. There are a further 3,300 applications to go.
Sheikh Mansour however suggested that not all of the country's lenders were eagerly going along with the policy, which requires them to waive significant amounts of debt.
"The banks have been dealing with this for three or four years. Most of the banks have co-operated positively," Sheikh Mansour said.
He also pointed the finger at the UAE's media, who he said had failed to raise awareness of the risks of significant personal lending.
"The local media hasn't performed well at this level," Sheikh Mansour said. "Some citizens are not aware of the process of calculating the interest of loans."
He said that the number of applicants for the debt settlement scheme was decreasing, but claimed that banks were taking advantage of local borrowers.
"Why is it possible to allow the banks to exploit the citizens in this way?," he added. "I advise: don't take out a loan unless you're in dire need of a loan."
Emiratis account for a minority in the wealthy Gulf nation, where foreigners make up about 85 percent of the population.