Dh93 billion of loans have been given to SMEs in the UAE
Experts in the field said they were surprised by the "hefty" figure revealed at the FNC meeting on Tuesday
Loans worth Dh93.1 billion have been given by banks to SMEs in the UAE, the governor of the Central Bank revealed at the Federal National Council yesterday.
Mubarak Al Mansouri, chief executive of Emirates Investment Authority, said almost 41,000 loans were made and the total amount of money lent equalled 6 per cent of total domestic credit.
This was considered surprising and hefty by business banking experts.
Martin Roussel, a business banking expert, said for Dh93bn to be divided by 40,000 companies – meaning that each company received about Dh2.3 million – was “good for SME exposure”.
“It seems as though the market has moved towards bigger and older companies. Hence the need to support younger and knowledge-based companies.”
Compared with loans given to the much larger population of Eastern Europe, for instance, Mr Roussel said the figure “sounds pretty big”. But considering the expensive cost of living in the UAE, he said the figure was reasonable.
Mr Roussel also expects further increases in loans given to SMEs in the coming period, “because we suffered quite a lot at the end of 2014 with the drop of oil prices, but now there are new players like Government funds looking for additional sources.”
“In an economy that needs to diversify, these guys (SMEs) need to be catered for,” he said.
During the session, the FNC also passed a draft law on lease financing as the practice was not previously regulated.
The law says that companies who practice lease financing without a license from the Central bank will face a fine of between Dh200,000 and Dh10m, and/or a jail sentence.
Lease financing is an important source of medium- and long-term financing where the owner of an asset gives another person the right to use that asset in return for payment.
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Updated: January 31, 2018 02:08 PM