The UAE has freed around 290 Emiratis who were jailed for bouncing cheques in the latest move by the Gulf state to help its citizens deal with their debts.
The move follows several Gulf-wide initiatives aimed at supporting local populations following last year’s Arab Spring protests.
The freed nationals have been presented with certificates to protect them from any future prosecution, said the UAE's official state news agency. Citizens in similar situations should report to the Public Prosecution to receive the certificates, it added.
UAE President Sheikh Khalifa Bin Zayed Al Nahyan in May allocated around AED5m to settle defaulted loans for each indebted Emirati. In August, the Central Bank ordered banks to extend maturities on personal loans held by Emiratis by more than four years.
Cheques are used in the UAE to underwrite credit cards, loans and guarantee future payments.
The global economic downturn exposed the UAE’s borrowing excesses, which were fuelled by easy credit during the country’s five-year real estate boom. When Dubai’s property bubble burst, thousands of expats fled the emirate leaving unpaid credit cards, mortgages and personal loans outstanding.
At the height of the country’s debt crisis in 2009, UAE lenders said they were seeing up to 2,500 customers leave the country every month without settling their debts.
The UAE central bank last year rolled out a set of rules aimed at limiting loans to individuals and capping banking fees in the country. The central bank has limited personal loans to 20 times the salary or the monthly income of a borrower with a repayment period set at 48 months.
More than 1.5m cheques issued for payments totaling AED55.3bn (US$15.05bn) bounced last year, according to data from the Central Bank.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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