Banks federation offers 90-day moratorium prior to legal action against defaulting firms, calls it a ‘mini insolvency law’ | GulfNews.com:
"The UAE Banks Federation said on Monday it will stop legal action against small and medium-sized businesses for 90 days and work with them to restructure their outstanding debt.
Due to a slowdown in the economy, many SMEs that belong mainly to the food and beverage and oil and gas industry, have been registering losses, resulting in bad debts for banks. This has moved the banking body, which includes 49 member banks, to announce a moratorium of 90 days before any legal action is initiated. During this time, the banks will also be looking at ways to restructure the bad debt so that troubled business will be able to begin repaying loans.
“This solution is a better solution than the immediate legal solution if the customer is genuine, because if he runs away to his home country, his business comes to standstill. It’s better for the bank to protect its interest by allowing the customer to restructure his business,” Abdul Aziz Al Ghurair, Chairman of UBF, told journalists."
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