Banks in the United Arab Emirates have agreed a plan to help small-and medium-sized businesses (SMEs) struggling with debt, including suspending payments and restructuring loans.
Many businesses in the Gulf have had difficulty repaying hefty debts after a fall in commodity prices and a slowing economy bruised their balance sheets.
Under the proposal outlined on Wednesday by the UAE Banks Federation, companies owing debt to more than one bank and finding it tricky to repay will be able to restructure future payments.
Payments could also be suspended while businesses reach a deal on their debt with lenders, the association of banks said.
"This again reflects banks' commitment to apply a co-ordinated approach, to alleviate SME funding difficulties and continue banks' support to the SME sector being vital to the national economy," said Abdul Aziz al-Ghurair, chairman of the federation and chief executive of Dubai's Mashreq bank.
Several banks have reduced lending to SMEs after a spate of defaults.
Some struggling business people opted to depart the country, leaving behind unpaid debts. A senior banking official in November estimated the amount owed by those fleeing reached around 5 billion dirhams ($1.4 billion) last year.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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