UAE banks have ‘contained’ SME debt problem: Al-Ghurair

The problem of indebted small business owners in the United Arab Emirates (UAE) fleeing the country after failing to repay debt has been contained, Abdul Aziz Al-Ghurair, chairman of the UAE Banks Federation was quoted as saying by Reuters.

"I think it's been contained and it's under control," Al- Ghurair said when asked whether the AED 5 billion figure for skips had increased since he last spoke about it in November.

"It's a work in progress and we'll have to continue working this year and next year to tackle this issue but, overall, the size of the issue is very small compared to the 1 trillion of lending," he added on the sidelines of an event in Dubai.

Many owners of small and medium-sized enterprises (SMEs) in the country opt to flee the country when their finances come under pressure. This is usually done to avoid bouncing a check; an offence that can land the issuer in jail under UAE law.

The UAE Banks Federation, which is made up of 49 member banks, agreed in March to a voluntary system whereby indebted businesses could restructure their loans to reduce their debt burden.

This system has been well received by customers, Al-Ghurair added, noting that while some business owners continue to leave, others have been negotiating with lenders.