Banks need to do more to help those in trouble
Financial houses must lend responsibly and come up with viable repayment schedules when things go awry
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.
