CB seeks data on Emirati loans

The central bank has asked banks in the UAE to provide details on personal loans they have extended to Emiratis over the past six years but it has ruled out any plans for debt repayment, a newspaper reported on Tuesday.

In a letter sent to the country’s 23 national banks and 28 foreign units, as well as financing companies, the central bank said it needed detailed information on personal loans provided to Emiratis during 2005-2010, Albayan said.

“The central bank gave the banks a deadline until May 12 to provide this information,” the Dubai-based Arabic language newspaper said.

It said a central bank official denied any intention by the Bank or any other government departments to repay default debt for nationals.

It quoted the unnamed official as saying the central bank has not received any instructions to repay debt for Emiratis. “As far as I am concerned, there is no government decision in this respect…we are seeking these details for monitoring purposes after the enforcement of the new personal loan regulations.”

According to the paper, the letter asked banks to supply the central bank with the size of those loans, their terms, payments, defaults and the number of debtors.

“The letter also asked banks to supply information about debt which defaulted for more than 90 days including personal loans for cars, property, consumption and other purposes…it also asked for data on mortgage loans.”

A new retail loan system announced by the Central Bank early this year to regulate personal lending went into effect on Sunday.

The new regulations capped personal loans at 20 times a borrower’s monthly salary and stipulated the loan must be repaid within 48 months.

They cover all retail loans including personal, car, housing loans and credit credits and are intended to control lending activity and excessive charges by banks following public complaints about a surge in bank fees.

Personal loans in the UAE, which has the largest Arab banking sector, had surged by at least 35 per cent during 2006-2008 before they sharply slowed down over the past two years following the 2008 global fiscal crisis and regional debt default problems, according to the Central Bank.

Its figures showed personal loans appeared to be the main victim of banks’ lending downturn over the past months, slipping to around Dh247.3 billion at the end of January from nearly Dh247 billion at the end of 2010.The decline was caused by a contraction in personal loans for consumption purposes, which fell to Dh64.5 billion from Dh65.2 billion. Personal loans for business purposes edged up to Dh182.8 billion from Dh191.9 billion.

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