Abu Dhabi: Loans of citizens who have defaulted on payments will be settled as per the initiative of His Highness Shaikh Khalifa Bin Zayed Al Nahyan, through the Debts Settlement Fund, according to an agreement signed with eight banks yesterday.
The agreement stipulates that the defaulting personal loans of 6,830 citizens, worth about Dh2 billion, will be paid off and cases against the defaulters will be dropped immediately.
The banks involved in the agreement are the National Bank of Abu Dhabi, Abu Dhabi Islamic Bank, Abu Dhabi Commercial Bank, First Gulf Bank, Union National Bank, Ras Al Khaimah Bank, Standard Chartered Bank and Mashreq Bank,
The fund has carried out a survey in cooperation with the Central Bank to assess the level of the default.
The initiative aims to alleviate the suffering of citizens who cannot pay back their loans due to different reasons.
Encouraging savings
The fund aims to encourage saving and to incentivise citizens not to fall into debt traps again.
As per the agreements, the banks will represent the fund in receiving applications from the defaulters.
The forms will specify the sources of their income which will help calculate instalments on a feasible basis.
The presidential gesture would settle the personal loans of citizens, whose debts are less than Dh1 million, be they in detention pending trial or convicted, or settling their debts through instalment schedules set by the courts.
Those in prisons will be released and have their loans settled in accordance with specific settlement mechanisms, including deduction of 25 per cent from their monthly salaries, with undertakings not to borrow again until the loan is settled.
CEOs and representatives of the banks were present to sign the agreement.
Shaikh Khalifa's gesture follows the recommendation submitted to him by the Supreme Committee of the Debts Settlement Fund for Citizens with Limited Income, chaired by Ahmad Juma Al Za'abi, Deputy Minister for Presidential Affairs.
The Dh10 billion fund was set up upon the decree issued by the President to ease the burden on the citizens with low incomes.
Earlier, Shaikh Mansour Bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Presidential Affairs, issued the decision to set up the higher committee to implement the directives by the President.
Signing ceremony
The signing ceremony was attended by Ahmad Juma Al Za'abi and Khaleel Mohammad Shareef, Chairman of the UAE Central Bank and a number of deputy ministers, Mohammad Abdullah Al Rumaithi, Undersecretary of the Ministry of Presidential Affairs for the financial sector and procurement committee member of the fund and other officials.
Ahmad A., 32, told Gulf News, that this initiative will help many citizens who are facing financial difficulties.
"I myself took Dh750,000 from three banks and spent almost all my salary to pay the loans. Once this is settled by the fund, it will be easier to pay as no more than 25 per cent of the salary," said Ahmad.
Fatima M., 27, told Gulf News the fund "will give defaulters a new life and will help banks regain their money. What is important is that the fund takes a pledge from the beneficiary that he will not take a future loan while paying instalments."
President's initiative
- Dh10b: fund set up to help citizens who have defaulted
- 25%: maximum deduction from salaries
