The Abu Dhabi Judicial Department has pulled up banks and financial institutions over the rising number of disputes and claims they are filing against debtors over loan guarantees, said local reports on Tuesday, August 24.
The reports said the department has warned creditors over giving loans to individuals and companies without sufficient guarantees.
Suffice to say that the guarantees help secure the ability of the borrower or their guarantor to pay back the loans.
Failing to take guarantees is a violation of the requirements and controls regulating the granting of loans, said the department.
Such action might result in the non-acceptance of cases filed by banks before Abu Dhabi courts, it added.
In a significant number of such cases already filed, ADJD courts have reportedly found that the guarantee provided by a borrower is not equal or proportional to the value of the loan.
In some other cases, banks apparently disbursed money against the borrower’s guarantee or his identification papers only.
The department warned banks of the need to adhere to the requirements for granting loans and to obtain adequate guarantees, ensuring thereby that borrowers have the financial ability to settle their loans.
In case of compliance with such regulations, claims filed before Abu Dhabi courts would be definitely admitted, and judgments issued against debtors easily enforced, said the reports.
