DIFC banks look to solve collateral problem - Emirates Business 24|7

The DIFC-based category one Indian banks are in talks with select local banks to find a solution to the vexing issue of how to take charge of collateral while giving loans to corporate houses in the UAE.

Though there are four Indian banks in the DIFC with category one licence that allows them to lend in foreign currency to corporates in the UAE market, being domiciled in the DIFC does not permit them to take charge of any collaterals based in the country, leaving the lending a bit risky for these banks. State Bank of India (SBI), Punjab National Bank, Axis Bank and IDBI Bank have got their category one licence in the last one year or so.

In an earlier interview, AJ Vidyasagar, Chief Executive of SBI's DIFC branch, has cited the shortcoming on the part of the DIFC-based banks in securing the loans though there is a huge potential to grow their loan book in this market. Talking to Emirates Business, Melwyn Rego, Executive Director & Head of International Banking, IDBI Bank, the newest entrant to the DIFC, said Indian banks are in talks with a few local banks to overcome the issue of taking charge of collateral against corporate loans.