Banks are too lax in granting personal loans, according to an online survey conducted by Emirates247.com.
Almost 60 per cent of voters in a website poll said that UAE banks should make it more difficult for residents to get a personal loan.
Of these, 32 per cent said that borrowing has always been too easy in the Emirates, while 27 per cent said that the current high levels of lending are unsustainable.
However, around 40 per cent of respondents believe that there should be no restrictions made on personal loans. Of these, 26 per cent said that "it would do more harm than good economically", while the rest believe that individuals should be left to decide safe levels of borrowing themselves.
Earlier Emirates Business reported that personal loans approved by local banks have soared by almost Dh5 billion in the first quarter of this year alone.
Financial experts believe that the rising inflation rate in the country, which is also being experienced across the Gulf region, would further boost personal loan applications to record levels towards the end of the year. UAE Central Bank figures show that personal loans provided by the country's 24 national banks and 28 foreign units jumped from Dh43.46bn at the end of 2007 to Dh48.4bn at the end of March.
Inflation in the UAE has become a major source of concern as it rose continuously to reach more than 11 per cent in 2007, from 9.2 per cent in 2006 and 6.1 per cent in 2005.
In 2004 and 2003, inflation rate was estimated to be only around five per cent and 3.6 per cent, respectively.
The weakening US dollar has also contributed to residents' economic woes and influenced their purchasing power as it pulled down the dirham's monetary value.
While industry analysts suggest that depegging the dirham from the dollar would help ease inflationary pressures, local authorities have stood by their decision to stick to the greenback.
Amid a lack of major pay rises in the private sector and with rents, cost of food and other consumer goods soaring at historic levels, economists say UAE residents will continue to resort to personal loans to sustain their spending needs.
Poll results
Should UAE banks make it more difficult to get a personal loan?
- 32%: Yes: it has always been too easy to borrow money.
- 27%: Yes: current levels of lending are unsustainable.
- 26%: No: it would do more harm than good economically.
- 15%: No: people can decide 'safe' levels of borrowing.
Today's poll:
How long do you plan to stay in your current job?
Vote now at Emirates247.com