Cheques begin to bounce in Dubai ..
Expatriate residents in the Gulf state struggle as the economy slows.
Blank cheques are used to underwrite financial arrangements, such as credit cards, in Dubai, guaranteeing future payments such as a rental agreement or bank loan.
This system arose in the United Arab Emirates (UAE), which includes Dubai, because of the difficulty of doing credit checks on foreign workers. As many of these workers have now lost their jobs in the recession, the number of bounced cheques has risen.
The penalty for failing to honour a cheque is severe and some people have ended up in jail. Dubai’s police chief said this year that about one fifth of all prisoners in the emirate were there because of bounced cheques. Most of these are likely to be foreign workers.
Official figures for the first four months of this year showed that 544,196 cheques bounced — equivalent to 5.7 per cent. However, analysts believe that the total figure may be much higher once all private sector cheques are included.
As many as one in four cheques could be bouncing, according to Ghanem Nuseibeh, senior analyst at Political Capital, a consultancy firm. His estimate is based on data from local banks and figures for departing expats. Cheques are a fundamental part of the Dubai financial system — Mr Nuseibeh, for example, wrote 70 cheques to cover payments for his car.
RAK Bank, which operates in Dubai but is based in neighbouring Ras Al Khaimah, has said that 2,500 of its expatriate customers were leaving every month with unpaid credit card bills. These individuals were also likely to be leaving behind bouncing cheques for accommodation and cars.
“Many of the British expatriates in particular tried to hang on as long as possible to life there and sadly many have ended up writing bounced cheques, having their passports confiscated so they cannot leave the country and really living in appalling conditions in bedsits shared with maids, or even in cars parked in car parks,” Mr Nuseibeh said.
UBS, the Swiss bank, has estimated that Dubai’s population of 1.5 million could fall by 8 per cent this year while Political Capital estimates the decline could be between 14 per cent and 28 per cent.
The UAE economy grew rapidly in recent years, driven by high oil prices and Dubai’s construction and tourism boom. Economic growth is now expected to fall to minus 1.4 per cent this year before recovering to 4.1 per cent next year.
The Times
---> MONEY OFFSHORE!!!
Never keep it in Qatar!
You can get into trouble from one day to the other, and if you have loans the banks will freeze your accounts if they start to doubt your credibility. Hence, only keep enough money to pay the bills, and send out the 1st of each month what you are supposed to save.
You maybe referring to the economies of the West. How about the impact and remedies in the Gulf? Some banks are collecting premiuns on CREDIT SHIELD (aka Credit Insurance) reflected on the monthly Credit Card Statement which as per advertisement could free the credit card holder from payment of any credit card balance in the event of involuntary loss if employment due to company closure or redundancy i guess.
Is this a full remedy for the credit card holder? How about on the macro level? Is this good for the economy? Because consequently, the insurance sector could be abused too.
Your comment pls...
Thanks
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I have sympathy only for the good guys out there.
The rest of those sleezebags who specualte on the backs of others,,,well I can only hope that they will get their dues.
I have been through 2 wipeouts, and survived them both. Its why I have learned that a safe bank account, and always sving enough to get you through a tough spot is the best insurance of all.
However, most people do not have the opportunity to save any money...
Its a shame when you see hardworking folk strugging to make ends meet.
Its also a shame when you see lazy fat bastards sat on their arses, not working, too happy to take the dole money, tax credits etc and living a better life than the harworking parents.
dont think so... they have to change the system.
regarding struggling ppl... its a pity. Really.
War looking for peace,
is like fornication looking for virginity.
Source:
- A study Conducted by FriedUnicorn - Vol I (September,1999)
was real estate speculation, prostitutes and booze....
POOF!
yes, its commercial law generally in use in the west...if you are the borrower, and you go under because of your own stupidity, then the creditor can present his case that the borrower has to pay back a percentage, rather than to go bankrupt and become free and clear.
Also, it is noted in your credit file if you went bankrupt in a financial crisis, when everybody else did, and thus not your fault, or if you squandered your resourses ect. and went backrupt in a time of plenty....it all gets worked out and it certainly has ramifications.
You must remember that in a mature economy going bankrupt also means the loss of livlihood for your family and children, loss of your home, ,,,,all sorts of things.
The lending of money is a serious endevour, and the lenders have to accept their responsibility as well,,,philosophically speaking....but it doesn't appear that they are doing so.
This economic cycle, lasting over the past 7 to 10 years, had some unique features....
Dubai will be owned by Abu Dhabi, eventually.
Inspite of all this .... Dubai will continue to attract tourist.....
I don't know about you, but I have met a few expats from Dubai..
Many landed in Dubai, thought they'd won the pools. Went out and bought luxury cars on HP and rented expensive villas and apartments..
I have no sympathy for them to be honest..
Defaulting on a repayment should not mean time in prison, in Dubai, Uk or anywhere else.
However, the rules are clear in Dubai. These people probably don't deserve to be locked up but maybe they should have thought about the consequences of living the high life.
Ignorant? Arrogant? Possibly
Criminals? Not in my opinion
Being careful is one thing, but if the other party does not adhere to the agreement, then he/she should be prosecuted..
Doing what you suggested will only lead to higher charges for future borrowers...
as long as there is not fraud involved, there is supposed to be adequate disclosure on both sides, and then both the lender perform their own risk analysis,,,'can I afford to borrow this amount of money?" and "should I lend this person(or company) this amount of money?"....and then the lender either takes security or not, which also fits into the equation...thats business,,,completely commercial and civil law...
It completely becomes criminal law what one of the parties misrepresents his/its position/salary/etc. or when a lender utilizes userous terms or interest rates,,,,then it becomes criminal with jail punishment,,,,
If one uses jail to enforce a commercial relationship, then at leats one of the parties can use it instead of being careful....which I assume is what is happening in the Gulf now,,,,
yes, they have better chances of paying their debts if they were in jail.......lol
don't let them leave the country but at least don't put them in jail so that they could find another job to pay their loans
iguess you are the best resource person for the above subject. Does this really save the debtor for situations arising from involuntary loss of job/involuntaty unemployment?
If indeed, this could be one of the remedies to be built-up on the credit system to prevent creditors and debtors sinking into s hole.
I am not really well-versed in insurance law. Highly appreciate your expertise.
Thanks!
Glitterfy.com - Glitter Graphics
"Financial matters should NEVER land someone in jail..."
i think that if a person agrees to pay a certain amount and then defaults , they he/she deserves to go to Jail...
Sh. Mohammad not to go toooooooo far and he should not forget that God's anger may fall on his City soon.
I think this is just a start !
A silent prayer of thanksgiving to The Most High for keeping us better in Qatar.
Not being pessimistic but expecting for the worst can save us future toubles by being alert on our spending habits and savings.
Sad news like this scare prople and once again contributes to the further shrinking of the economy - the buying public would again start spending less. But then again, the buying public is simply scared to spend due to the threat of future unemployment. Balancing the economic activity is heck of a job!
Glitterfy.com - Glitter Graphics
part of a financial system.
These folks looked at a movie a long while ago and decided to set up a system that looked like what they saw,,all glamour, glitz and bling. Unfortunately, there is much, much more to it.
Financial matters should NEVER land someone in jail...that is what risk analysis and bankruptcy laws are for,, and the lenders ar esupposed to build this into their system, and write it off...
What is currently happening in the Middle East with debt clearly shows that you ahve to impirt the whole system, and not cherry pick the good parts only....
It is just starting, and this will last a long while.
Unfortunately, those who had to jump ship will never be able to return to the Middle East, and it wil be the area that will suffer....
I feel, we are lucky who have not yet lost the job.
A sad year. The bubble has burst?