My Letters - THE NATIONAL - Dt. 13.10.2010 - Rise of wealth brings more indebtedness
Rise of wealth brings more indebtedness
Last Updated: Oct 13, 2010
A reader questions the long-term viability of many airlines in the Gulf region.
Karim Sahib / AFP
next photoprevious photo
I refer to the front page news article Wealth of the UAE has tripled in the past decade (October 10). While I am happy to read that the wealth of UAE residents has tripled, I was touched in the same article that the residents have also quadrupled their indebtedness. These statistics are indications of a giant killer, already in action, and waiting for more action in the coming months. As the demand for credit cards and loans grew a couple of years ago, consumers and banks equally cashed in on the booming market. There was a plentiful availability of credit facilities provided by the banks without any real credit checks.
Without any insights about what would be the impact on the overall customer base, many banks rearranged their credit policies including the interest rate on lending, card usage and payment periods. Mounting interest for delayed payments have severely affected customers. This explains the increased overall debt figures currently prevailing. Any realistic analysis will show the result of these changes initiated to rescue bank funds which were depleted due to wrong financial investments in local and international markets.
Customer confidence in banks and their lending policies has taken a deep dive and it will take a lot of restructuring of the prevailing credit policies for confidence to return. It is time for banks to have competent financial advisers placed within their lending and collection departments before they offer credit to customers and before collection agents proceed with actions against hapless customers.
Ramesh Menon, Abu Dhabi
To read it in original, please visit THE NATIONAL online.