By Sam Bridge
AbdulAziz Al Ghurair says federal law to decriminalise insolvency will help lenders reduce cost of bad debt
The chairman of the UAE Banks Federation has hailed a decision to approve a federal law to decriminalise insolvency and protect those who are unable to pay their debts from going bankrupt.
AbdulAziz Al Ghurair called the move a "crucial step" as the UAE advances its positioning as a regional economic hub and financial safe haven.
"Regulations too will evolve to support the financial wellbeing and stability of local entrepreneurs and business owners. I commend the Ministry of Finance for taking such a crucial step in supporting individuals in their time of need, and improving the ease of doing business in the country," he said.
"The regulation will undoubtedly prove mutually beneficial to both the business community and the banking sector, offering individuals an opportunity to restructure their finances while helping local lenders reduce their cost of bad debt," he added.
The UAE Cabinet passed the new law, to be implemented at the start of next year, to support those struggling with financial difficulties, help them reschedule their debts and give them the chance to receive new concessional loans.
In protecting them from legal prosecution, it will also offer an opportunity to work and provide for their families.
The law also contains special provisions that contribute to the swift completion of legal procedures and reduces the fees charged for rescheduling and restructuring the debts, with a view towards finding a fair compromise for both creditors and debtors.
The move, which works hand in hand with existing financial laws, is designed to strengthen the economy by promoting investment, improving competitiveness and encouraging entrepreneurship.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.