UAE | Government
FNC addresses growing personal loan problem
The Federal National Council (FNC) approved on Tuesday several recommendations to solve the growing problem of personal loans.
- By Eman Mohammed, Abu Dhabi Deputy Editor
- Published: 00:17 April 23, 2008
Abu Dhabi: The Federal National Council (FNC) approved on Tuesday several recommendations to solve the growing problem of personal loans.
The session was attended by Obaid Humaid Al Tayer, Minister of State for Financial Affairs, and Sultan Nasser Al Suwaidi, Governor of the Central Bank.
Yousuf Obaid Al Nuaimi, of the personal loans committee, read out the committee's report which was drafted after five meetings since August 2 last year. The committee interviewed many representatives from both the government and private sector.
The report noted a massive growth in loans, from Dh155.2 billion in 2000 to Dh695 billion in 2007. About 10,000 people are in courts or jail because of loan difficulties, according to the report.
Cases of default increased substantially from 3,149 cases in 1998 to 5,710 cases in 2006 from a total of 562,000 loans. The total growth in personal loans reached Dh43 billion in December 2007.
The committee noted that laws are not effective to reduce the problem, while the ministry of finance, the central bank, and the community are not capable of putting an end to this problem.
Credit body
Members of the FNC debated with the minister and the governor over the idea of establishing an independent federal credit body or bureau aiming to provide a centralised data-base and index on the risk of loans.
"The government is studying a law to establish a credit information authority and the procedures to issue it are in progress" Al Tayer said. "The central bank shares confidential credit databases with banks only, and developing that process may lead to establish a historical credit database for each case, not only classified data," Al Suwaidi added.
Members of the FNC asked the central bank to strengthen its regulatory authority through techniques providing the necessary technological expertise and human resources.
"Around 33,000 cases are in courts because of personal loans," a member commented.
"75 per cent of those cases are returned cheques between house owners and tenants, and traders and suppliers, only 7 per cent are banking cases. In the 5,710 banking cases rarely has someone gotten jailed," the governor responded.
Closed session: Demographic study
In a closed session Abdul Rahman Mohammad Al Owais, Minister of Culture, Youth and Community Development, answered members questions regarding plans to preserve the national identity, Gulf News learned.
Al Owais revealed that the ministry's demographic study for the population and future plans that go in line with the government's strategy to preserve the national identity.
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