The UAE has set aside $410 million to cover defaulted debts owed by Emiratis, state news agency (WAM) reported Monday.
The measure came after UAE’s President Sheikh Khalifa bin Zayed al-Nahyan ordered the Higher Committee of the Nationals’ Defaulted Debts Settlement Fund to support UAE nationals who are in debt, WAM said.
In addition to banks agreeing to cut one percent of interest on dues owed, Sheikh al-Nahyan’s orders stated that the restructuring of loan settlements by indebted Emiratis will not exceed 50 percent of their monthly earnings.
WAM did not disclose how many Emiratis will benefit from the decision but said that the scheme was approved following proposals made by six major banks in the UAE namely the National Bank of Abu Dhabi, Abu Dhabi Commercial Bank, First Gulf Bank, Abu Dhabi Islamic Bank, Union National Bank and Al Hilal Bank.
Clearing UAE nationals’ debt is the latest attempt to decriminalize bouncing security checks for citizens who have defaulted in their personal loans.
In November, UAE authorities freed about 290 Emiratis, who were imprisoned for bouncing security checks. Reports say they have been presented with certificates to protect them from any future prosecution while other citizens in a similar situation should report to the Public Prosecution to receive their certificates.
Last May, Sheikh al-Nahyan allocated around $1.2 million to settle defaulted loans for each indebted citizen. And in August, the Central Bank ordered lenders to extend maturities on personal loans held by Emiratis by more than four years.