Published on: 2/9/2020IST

UAE Banks to go after big ticket business loan defaulters

Customers waiting at a UAE bank branch. Over the past five years, total defaults by Indian borrowers in the UAE is estimated in excess of Dh26 billion (Rs500 billion).

Dubai: Leading UAE banks are understood to be initiating legal action against Indian borrowers who skipped their loan repayment and moved to India.

During the last few years, starting 2016, a number of Indian businessmen and salary earners have left the country leaving behind a trail of loan defaults following stress in the small and medium enterprises (SME) sector which resulted in a domino effect in terms of business failures and job losses.

At the peak of the SME sector stress in 2017, UAE banks’ non-performing loans (NPL) amounted to more than 7.5 per cent of the total loans and was estimated close to Dh9 billion that year with Indian borrowers accounting for a major chunk.

Although the pace of NPL formation has been on a decline in 2018 and 2019 and most banks have deleveraged from problem areas, loan defaults and rising provisions have been a big drain on the profitability of many banks in recent years.

2/9/2020 | | Permalink