Banks in the UAE will have to comply with new loan regulations that restrict how much they can lend to the government and government-related entities, according to Nasser al-Suwaidi, the governor of the central bank.
The new regulations came into force at the end of September and with several of the country’s largest banks in breach of the rules there has been confusion in the industry about their implementation.
“Banks will have to comply,” says Al-Suwaidi. “Any extension to the deadline has to be decided by the board [of the Central Bank of the UAE].” He declined to elaborate on whether an extension was being considered.
National Bank of Abu Dhabi, one of the largest banks in the country and also in breach of the rules, has said it has been given an extension until March next year. Other lenders are not thought to have been granted any similar treatment, but several say they are petitioning the central bank for an extension.
The new rules will limit how much banks can lend to the government and state-owned firms to 100 per cent of their capital, while exposure to any single government or government entity is capped at 25 per cent of their capital.