DUBAI, June 9 The United Arab Emirates may soon
fine banks which grant loans to consumers who are unable to pay
back the debt, the central bank governor was quoted as saying in
remarks published on Saturday.
The UAE is working on a law to protect consumers' rights,
which would include "fines for banks that lend to borrowers who
cannot afford to repay", The National newspaper quoted Sultan
Nasser al-Suweidi as saying.
The governor was speaking at a meeting last month of the
Federal National Council, an elected body which advises the
government, the paper said. He did not give further details.
The UAE is still recovering from its 2009-2010 corporate
debt crisis. Banks' provisions against bad loans rose 25 percent
from a year earlier to 55.3 billion dirhams ($15.1 billion) last
December, central bank data show.
In April, the central bank expanded its large-exposure limit
rules for commercial banks, introducing new caps for loans made
to local governments and their entities in the first such change
in nearly two decades.
In addition to preventing banks from putting themselves at
risk, authorities want to restrain excessive lending in order to
improve the welfare of middle- and lower-income citizens. Last
month, state news agency WAM said the government would pay off
up to 5 million dirhams of defaulted loans for each indebted
(Writing by Rania El Gamal; Editing by Andrew Torchia)