Debt Collectors Hunt Dubai Defaulters Abroad
In one example cited by the UAE daily Dubai-based mortgage lender Tamweel has hired a debt collection company to pursue a customer in India and is threatening to take legal action in India and the UAE if the customer does not pay up.
“If the customer chooses not to cooperate, then, under the legal framework, we reserve the right to recover our dues,” Tamweel was quoted as saying in a statement.
Banks and mortgage providers in the UAE have seen the amount bad loans on their books soar over the past 18 months amid the economic downturn.
They went on a lending binge during the boom years, but when the global financial crisis hit many expatriates who lost their jobs returned home without paying their debts.
Banks are increasingly turning to the courts to recoup losses with Barclays recently winning a landmark court case in Dubai allowing the British bank to repossess properties of customers who had defaulted on mortgage payments.
UAE bank provisions more than doubled to $2.57 billion in the first nine months of 2009, compared to the year-earlier period, and likely ended the year near the $4 billion mark, according to the Kuwait Financial Centre (Markaz).
Provisions as a percent of UAE banks’ total loans likely reached 1.72 percent by the end of 2009, up from 1.13 percent in the first nine months of the year, Markaz said.