Bahrain’s Shura Council members have blocked the formation of a new BD50 million ($131.87 million) fund to help repay people's personal loans.

They said the fund, which was proposed and rejected by parliament last month, was unconstitutional and would encourage people to take more loans, according to a report in the Gulf Daily News, our sister publication.

"This fund is awarding those who take loans possibly for genuine reasons or in other cases for lavishness, while citizens who should be awarded for not borrowing and working according their finances are deprived of such privilege," said council financial and economic affairs committee secretary Dr Aysha Mubarak.

"The rule of equality as stated in the constitution is being disregarded here and for that we believe that this law shouldn't have been drawn up in the first place."

The bill has now been shelved because both chambers of the National Assembly rejected it, meaning it cannot be discussed until new MPs are elected in October next year.

Central Bank of Bahrain (CBB) Governor Rasheed Al Maraj told MPs last month that loans worth BD1.5 billion had been taken in Bahrain.

He said that since 2004, the CBB has put restrictions on loans, and of those currently owing instalments to banks, only three per cent are unable to repay. – TradeArabia News Service