ABU DHABI // Bank officials dispute that improved education will lead to better financial practices, saying not only are Emiratis taking out more debt, but they are using their knowledge to find the largest possible loans at the lowest cost.
Bank representatives say that previously UAE nationals took out loans without questioning the rate, but today they “haggle”.
“The Emirati customer is more educated and aware,” said M S, an Emirati employee at the National Bank of Abu Dhabi.
“He now knows exactly what loan to take with the lowest interest. They compare prices and will often visit other banks to find the best offer.” Another Emirati NBAD representative said this does not mean fewer nationals taking out loans, but instead they are taking on more debt.
“Most customers are now focusing on personal loans to maintain their houses, with amounts ranging from Dh150,000 to Dh1 million,” she said.
Statistics from the judicial department show Emiratis with financial cases against them rose by 50 per cent in one year, from 2,423 in 2013 to 3,638 in 2014.
“There are now strict guidelines by the Central Bank but still Emiratis will not stop taking loans,” M S said.
salnuwais@thenational.ae
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About this special report:
A study by McKinsey & Company in 2011 showed that 70 per cent of UAE nationals younger than 35 are in debt. Car loans are the most popular with Emiratis and unregulated banks do nothing to improve the situation by encouraging locals to take out unsecured loans up to four times their annual salaries. Non-payment of loans has led to countless arrest warrants and jail time. Last year, 3,638 Emiratis had cases filed against them in Abu Dhabi judicial courts for bounced cheques. As a result, the Emirates Foundation and the Ministry of Education have teamed up to educate young people, and tackle the problem of financial illiteracy that plagues the country.
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