Yesterday’s edition of Gulf News highlighted the troubling case of an American who has been eking out a living in the UAE for the past decade because a bank imposed a travel ban on him when he missed payments because of falling ill.
This man is not alone, and there are hundreds in the UAE who face a similar fate.
Yes, taking out a loan is a proposition that should not be viewed lightly. Clearly, however, there is a failure on financial institutions when it comes to working with customers who fall into arrears. It is in no one’s interest that a defaulter, for whatever reason, is treated like a pariah. And there is no point in jailing a defaulter because no one gets anything then.
Firstly, banks need to do due diligence when it comes to lending — and must fully utilise the services of the credit bureau in doing so. Asking a customer to volunteer information isn’t due diligence.
Banks need to work on coming up with viable repayment schedules for those in trouble. Yes, a travel ban is necessary, but it should not be the end of the process.
