UAE’s National Bonds to allow customers to take loans from banks against their savings

UAE’s National Bonds to allow customers to take loans from banks against their savings

Dubai: UAE residents could soon start using their savings with National Bonds to take out short-term loans. Since all such loans would be backed up by their existing savings, borrowers get to pay lower interest rates on these loans. National Bonds’ initiative is timed to perfection with the current consumer mindset, where higher interest rates have them worried about committing to big-ticket purchases such as a car or a home or for other purposes. The UAE Central Bank has matched the successive rate hikes done by the US Federal Reserve, the latest being earlier this month. And more are coming. Already, the UAE consumer financing marketplace is seeing a sharp uptake in BNPL (Buy Now Pay Later) financing, which comes with 0 per cent interest and where the individual pays back what’s owed over 4-6 months, typically. The National Bonds’ plan is to allow its customers access to bank lending, typically for loan tenors of 1- to 3- years National Bonds’ CEO, Mohammed Qasim Al Ali, makes a point that the actual lending will not be done by the company. Instead it will get banks/third-party lenders to do the needful. “We are not a bank, we are ‘half a bank’