The UAE Central Bank has directed lenders to help reduce the debt burden of Emiratis, although it has not specified how this should be done. The Central Bank is rightly concerned that some individuals have unaffordable monthly instalments for personal loans.
Efforts to implement such a directive must be dealt with very carefully to avoid any unintended consequences for the economy or the financial system.
They should not be seen to compromise the principle that everyone has a responsibility to repay the debts that they incur. This is the basis of global economic activity and the international financial system and is the backbone of business confidence. Any perception that banks will have to accept an arrangement that will be detrimental to their business will not be good for investor confidence. However, the Central Bank has made it clear that any solution should be a result of more cooperation between the agencies concerned.
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