SME LENDING

Dubai 2018 | FINANCE | COLUMN

TBY talks to Peter England CEO, RAKBANK on SME lending and financial education in the UAE.

Peter England

How is SME lending being encouraged in the UAE?

There is a lot of talk about SME lending here at the moment, and we ourselves have seen some results through the Mohammed bin Rashid Innovation Fund. We have dispersed one loan through the fund and are working to increase our cooperation. There is also talk about some kind of SME guarantee scheme being developed. From my experience, these things can work, but ultimately the most powerful partnership is where the client and bank work directly together on a risk participation basis: the client with its equity, the bank with its funding, and the ensuing interest. That is the most effective model going forward.

How do you qualify the level of financial education in the UAE?

Historically, this has been a big weakness. Banks have overstretched borrowers and have not focused on consumer education. In the last three years, there has been a major push by the regulator to get more serious about proper financial education, disclosure, and helping clients understand the implications of their financial decisions. There has been an improvement, but there is still room for growth.