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29 March 2024

Central Bank cannot force banks to strike deal with defaulters

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By Staff

The UAE Central Bank cannot force banks in the country to reach a deal with debt defaulters and the two parties must negotiate a settlement in line with their debt contract, a newspaper said on Wednesday.

Emarat Alyoum Arabic language daily quoted a senior Central Bank official as saying it would intervene only when the two parties fail to reach a deal and there is a dispute regarding the payment of the remaining debt.

“The Central Bank cannot force banks to reach a deal with defaulters…the debt contract should be the basis for their relationship as long as the bank is abiding by the financial systems enforced in the country,” the unidentified official said.

“The Central Bank can intervene only when there is a dispute…this can be done through the complaint channel at the Central Bank, which will send it to the bank concerned for response…after receiving that response, the Central Bank will then decide whether there is a violation of the rules or not.”

The paper said the official was reacting to complaints by debtors that the Central Bank has ignored their applications for assistance in reaching a settlement with their creditors after their failure to pay debt on time.

It quoted the official as saying that most of the settlement deals sent to the Central Bank showed there was an increase in interest rates, adding that debtors reject such increases and resort to the Central Bank for help.

He said debtors should wait for response and should avoid contacting the Central Bank by phone as “we can not contact each client separately.”

“The Central Bank receives a large number of complaints every day, ranging between 30 and 50 complaints through e mail, fax or in person…the complaints are usually entered through the Central Bank’s electronic system which is connected to banks…these banks need to take some time to respond.”

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