Defaulted on a bank loan? You may still be able to borrow

Persons who default on debt can still borrow from local banks under debt classification regulations introduced by the central bank, the Arabic language daily Emarat Al Youm said on Thursday.

Citing an unnamed central bank official, it said the new rules do not mean that defaulting persons and companies should be deprived from borrowing from other banks.

“Those who wish to borrow again can provide the new bank with sufficient guarantees to persuade it that their default was caused by circumstances that were out of their control and that such circumstances have ended,” the official told the paper.

He said classification of clients is the responsibility of the lenders and that they should take enough provisions against such loans.

“Any loan obtained by a customer appears in the files of the central bank, which then gives classification to those customers…but banks can have access to these files to ensure they are committed to paying debt on time before providing them with new loans.”

The official said some banks halt loans to defaults according to information they get from the central bank’s risk centre.

“They do so in line with their own policies and decisions not according to any circular from the central bank…this policy could be a result of the banks’ fear of further defaults,” the official said.

Follow Emirates 24|7 on Google News.