New regulations will half time for loans to be classified as non-performing
The Central Bank of the UAE has reviewed draft regulations for the accounting of bad loans by local banks, which includes halving the time it takes for loans to be classified as non-performing.
The central bank said that at a meeting on 4 November it ordered a further study of the new regulations, which would decrease the time it takes for a loan to classified as non performing from 180 days to 90 days.
The total value of non-performing loans have been rising in the UAE as the effect of a global economic slowdown hits the country. Douglas Beckett, head of retail banking at Mashreq, said that the banking sector had seen unprecedented levels of delinquencies on loans during the first half of 2009. The new regulations would force banks to account for these bad debts much sooner than they are currently obliged to.
The central bank said it also reviewed proposed regulations on bad loans, and the allocation of provisions, and also new regulations for the mortgage industry.