A decision by President HH Sheikh Khalifa bin Zayed Al Nahyan to pay nearly Dh2 billion in debt owed by 6,830 Emiratis to local banks will bolster domestic liquidity and reduce non-performing loans, the Central Bank governor was reported on Thursday as saying.
Sultan bin Nassir al Suwaidi said the decision covers those who are in urgent need for debt settlement but more national debtors would benefit later from a Dh10-billion-fund ordered by Sheikh Khalifa to settle the personal loans of low-income citizens following massive defaults.
“There is no doubt this decision will cut allocations by banks for non-performing loans and this will help them boost liquidity…it will also provide additional funds to finance projects,” he told Alittihad newspaper.
“We are optimistic that the main problems associated with personal loans by Emirati citizens will be tackled completely.”
Suwaidi said the initial Dhtwo-billion settlement ordered by the President would benefit those who have “real debt problems.”
“But the other debtorss will also benefit from the Dh10-billion fund ordered by the President in December to settle the debt of low-income citizens…besides tackling their financial problems, the decision will also help family stability.”
Suwaidi said the move would enable the country’s 51 banks to recover debt and this “means fresh liquidity would be injected in the banking sector.”
He said more than half of the indebted Emiratis have obtained loans below Dh500,000, with their total debt standing at nearly Dh28 billion, adding that this category accounts for nearly 58 per cent of the total personal debt of about Dh48 billion owed by nationals at the end of October 2011.
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