Hidden Debt UAE: When $2.1bn Became $6.6bn Overnight

A board pack lands on a Monday morning in Dubai. Revenue is holding. The bank balance looks workable. Then a lender asks a simple question: can you list every borrowing, every guarantee and every cheque given as security, across every entity in the group, and prove that list is complete? The room goes quiet. Not because anyone is hiding something on purpose. Because nobody owns the full list. That silence is where hidden debt UAE problems start, long before any court case or administrator arrives.

This week that question stopped being theoretical. On 14 October, Gulf News reported that B.R. Shetty, founder of NMC Healthcare and UAE Exchange, had filed a $15 billion claim in the Bombay High Court against Bank of Baroda and 25 other defendants. Reuters, which reviewed the filing, reported the claim alleges the bank and others helped enable fraud involving his businesses and left him facing demands under guarantees he says he never signed. Bank of Baroda said it had not been served, that the allegations remain untested in court, and that it would defend itself firmly while continuing recovery proceedings for about Rs28 billion in outstanding dues.

We are not writing about who wins that case. No court has tested those allegations, and we will not present them as fact. We are writing about the number underneath it, the one that has been public since 2020: when NMC entered administration, it disclosed debts of $6.6 billion, against earlier estimates of $2.1 billion. A gap of $4.5 billion. That gap is the lesson for every UAE group with more than one entity, more than one bank and more than one person who can sign.

Hidden Debt UAE: What the $4.5 Billion Gap Actually Means

Most owners read $6.6 billion and think: that could never be us, we are not that size. Size is not the point. The mechanism scales down perfectly. A facility taken by one entity and never entered in the group ledger. A guarantee signed for a sister company and filed in a drawer. Cheques written as security for a third party. A loan approved in a meeting whose minutes never reached finance. Each item is small on its own. Together they mean the balance sheet the directors were reading was not the balance sheet the lenders were relying on.

Contemporaneous reporting in 2020 described exactly that pattern building up in stages: first more than $2.7 billion in facilities that had not been disclosed to or approved by the board, then further facilities identified in the weeks that followed, then the $6.6 billion total. Whether any single allegation in the new filing is proved or not, that sequence is a governance warning: debt did not appear overnight. It was discovered in layers because it had never been recorded in one place.

Why completeness is harder than accuracy

Accuracy asks: is this loan recorded correctly? Completeness asks a harder question: is there a loan that is not recorded at all? Your accounting system cannot answer the second question. It only knows what was entered into it. A completeness check has to start outside the ledger — with banks, with board minutes, with guarantee registers, with the people who negotiate facilities — and work back into the books. If your audit preparation starts and ends inside the accounting software, you have tested accuracy and called it completeness. Lenders do not make that mistake.

The Lawsuit Is About the Past. The Debt Register Is About Yours

The new claim, as reported, is split into $5 billion in direct damages, $5 billion in consequential damages and $5 billion for reputational harm, with 18% annual interest sought on the first $10 billion. Those are the claimant's figures in a filing a court has not tested. Bank of Baroda's position, in its stock exchange statement, was equally clear: it had not been served, it could not comment on untested pleadings, and it would defend the suit firmly if served.

Hold both sides at arm's length and one practical point remains. Disputes about guarantees turn on documents: who signed, who authorised, what the board approved, what the bank holds. In a dispute, a guarantee is not proved by memory or by who usually signs. It is proved, or challenged, on paper. That is why the register matters while things are calm, not after a demand arrives.

Five places debt hides in a UAE group

• Sister-company guarantees. Entity A borrows, Entity B guarantees. A's books show the loan. B's books may show nothing at all, because no cash moved. The obligation is real even though the transaction was invisible in B's ledger.
• Personal and shareholder guarantees. A founder guarantee given to a bank may never be minuted or logged centrally, yet it shapes what happens if the facility is called.
• Cheques as security. Undated or security cheques given to lenders or suppliers sit outside the payables ledger until someone presents them.
• Off-ledger facilities. Supplier financing, informal shareholder advances and related-party loans that were agreed verbally and never documented as debt.
• Contingent promises. Comfort letters, undertakings to a free zone authority or landlord, and commitments given during a negotiation that finance never saw.

None of these need bad intent. Most grow out of speed: a deal needed closing, a signature was quicker than a process, and the paperwork was going to be tidied up later. Later rarely comes with a date attached.

What a Lender's Completeness Check Looks Like

When a serious lender, investor or administrator tests completeness, they do not start with your trial balance. They work from the outside in. Understanding that order changes how you prepare.

First, they ask every bank for direct confirmation of every facility, guarantee and security held in the group's name. The bank's list is compared with yours. Any facility on the bank's list that is not on yours becomes the first question of the review, and the hardest to answer casually.

Second, they read board and shareholder minutes looking for approvals — and for facilities that exist without approvals. A borrowing with no minute is a governance finding even if the money was used well. A minute approving a facility that finance never recorded is a completeness finding even if the amount is small.

Third, they trace cash. Money that arrived in a bank account had a source. If the source was a borrowing, it belongs in the debt register whatever it was called at the time — advance, support, temporary help. Names do not change obligations.

The question your finance team should be able to answer in one hour

Try this test this week. Ask for a single page that lists, for every entity in your group: lender, facility type, limit, amount drawn, security given, guarantee given by whom and for whom, maturity date, and the board approval date. Give the team one hour. If that page cannot be produced from a register that already exists — if it has to be built from memory, email searches and calls to relationship managers — you have found your gap while it is still cheap to close.

Building Audit-Ready Financial Statements That Can Prove a Negative

Audit-ready does not mean a tidy profit and loss account. For borrowings, it means being able to prove a negative: that there is no debt beyond what is recorded. Auditors call this the completeness assertion, and it is the assertion that fails when registers are missing. You can support it, but only with evidence created during the year, not assembled the week before the audit.

Start with a debt and guarantee register owned by one named person. Every new facility, guarantee, security cheque and related-party advance goes on it before funds move, not after. Each entry carries the signed agreement, the board approval and the bank confirmation. When an entry closes, it is marked closed with the bank's release letter attached — an obligation is not gone because the balance hit zero; it is gone when the lender confirms the guarantee or security is discharged.

Then reconcile the register three ways, every quarter: register to general ledger, register to bank confirmations or facility statements, and register to board minutes. Three short reconciliations, done quarterly, will catch almost every hiding place listed above while the people who signed still remember why.

Disclose what remains contingent. A guarantee that may never be called still belongs in the notes to the financial statements as a contingent liability when it meets the disclosure test. Burying it because "it will never happen" is a judgement a reader of your statements is entitled to make for themselves — with the facts in front of them. Our work on profit versus cash flow in the UAE makes the companion point: a healthy-looking profit figure tells a lender very little if the obligations around it are incomplete.

Why This Matters More in the UAE in 2026

Scrutiny is not standing still. The FTA carried out 103,680 field inspection visits in the first half of 2026, up 21% on the year before — a sign of an enforcement culture that checks records rather than accepts summaries, as we covered in our look at the inspection surge. Banks are moving the same way. After a decade of high-profile group collapses in the region, credit teams ask for group-wide exposure views, not single-entity snapshots. A group that cannot produce a complete debt picture pays for that gap in slower approvals, heavier security demands or a lower facility than the trading numbers deserve.

Corporate tax adds a second reason. Interest deductibility, related-party balances and thin-capitalisation questions all start from a complete list of borrowings and the parties behind them. If the register is incomplete for the bank, it is incomplete for the tax return too. The same discipline that supports supplier verification under the new KYS rules — verify outside the ledger, keep the evidence, do not rely on what the software happens to show — applies to your own liabilities with even higher stakes.

A 30-day clean-up plan for owners and CFOs

1. Week 1 — Collect. Write to every bank and lender for a full statement of facilities, guarantees and securities for every group entity. Ask relationship managers in writing, and keep the replies on file.
2. Week 2 — Compare. Match every item the banks list against the ledger and the board minutes. Log every difference, however small, and assign each one an owner and a deadline.
3. Week 3 — Document. For each confirmed obligation, file the signed agreement, the approval minute and the security documents behind one register entry. Where a guarantee's paperwork cannot be found, record that fact honestly and take advice on confirming it with the lender.
4. Week 4 — Control. Set a simple rule: no director or manager signs a facility, guarantee or security cheque without the register owner being notified before signature. One rule, applied without exception, stops the gap reopening.

That plan needs no new software and no restructuring. It needs one owner, four weeks and a refusal to accept "I think that is everything" as evidence. If your monthly close already feels stretched, this is exactly the kind of work that belongs in a structured monthly bookkeeping routine rather than a year-end scramble — the habits are the same: reconcile early, file evidence as you go, never let a balance rest on memory.

The Debate Worth Having in Your Next Board Meeting

Some directors will push back. A full register, properly disclosed, can feel like it weakens a negotiating position. Why volunteer a guarantee list to a lender who has not asked? Why disclose a contingent item that will probably never crystallise? It is a fair argument to have out loud — and the NMC numbers are the counter-argument. The cost of an incomplete picture is not embarrassment. It is decisions made on wrong numbers for years: dividends paid while guarantees sat unrecorded, new borrowing taken on while old security was still live, a sale or investment negotiated before the other side's diligence found the gap and repriced the deal.

Transparency inside the boardroom is the minimum. What leaves the building — in audited statements, lender packs and tax filings — must be complete by law and by standard, not by preference. The board's real choice is not whether the full picture exists. It is whether the board sees it first, or someone else shows it to them.

We see the smaller version of this story regularly: a group where finance learns about a facility from a bank statement, a guarantee discovered during a licence renewal, a shareholder advance that three people describe three different ways. None of those clients set out to hide debt. They grew faster than their registers. Growth is the point of the business. The register is how growth stays provable.

Conclusion: Count the Debt Before Someone Counts It for You

The $15 billion filing will take its course, and the court — not commentary — will decide what is proved. The $6.6 billion against $2.1 billion is already history, and its lesson does not depend on the new case at all: a group's real obligations are whatever its lenders can document, not whatever its ledger happens to contain. If those two lists differ, the lender's list wins in every room that matters.

Close the gap while it is an admin task, not a dispute. Build the register, reconcile it quarterly, minute every approval, and make one person own completeness. If you want an outside pair of eyes on it, Escrow's audit-ready statements and CFO advisory teams do this work with UAE groups every month — from the first lender-confirmation sweep to the disclosure notes. Book a free consultation at escrowconsultinggroup.com and bring us your one-page debt list. If you cannot produce it yet, bring that fact instead. It is the best starting point there is.

Sources: Gulf News, 14 October 2026; Reuters, 14 October 2026. Allegations in the filing are reported as untested; Bank of Baroda states it has not been served and will defend itself firmly.