Commercial banks in the UAE, a major financial hub, have been warned to help write off the debts of UAE citizens or face punitive measures, local media reported on Thursday, quoting a senior government official.

Banks must cooperate with the Debts Settlement Fund, a state-backed initiative set up in early 2012 to help heavily indebted Emiratis, said Ahmad al Zaabi, deputy minister for presidential affairs.

"We advise the banks that have not cooperated yet with the fund to do so," he said.

"If they continue to refuse to cooperate we will contact the Central Bank to publish the names of these banks. Decisions will be issued for the government to not cooperate with these banks," he added, The National newspaper reported.

He did not specify how many banks had failed to cooperate. The UAE banking industry federation and the central bank declined to comment on the reports, while a spokesman for the Debts Settlement Fund could not be contacted.

Under the initiative, banks have to waive 50 percent of debtors' loans while the other half is settled by the 10 billion dirham ($2.7 billion) fund.

The fund has so far settled debts of 2,700 applicants out of a total of 6,000, paying more than 1.8 billion dirhams to banks, Al Zaabi said at the opening of the fund's headquarters.

UAE nationals secured massive personal loans from banks during the boom years of 2003 to 2008, but found themselves struggling to repay debt after a financial downturn and real estate market crash.

Since then, the government has initiated a raft of welfare measures for UAE citizens, who are believed to account for fewer than 20 percent of a population which is as large as about 9 million people.  - Reuters