Central Bank of the UAE releases for consultation proposed new regulations to better control real estate exposures in the banking industry
The Central Bank said it has invited banks to provide comments on the proposed framework through the UAE Banks Federation by October 31.
The Central Bank of the UAE has released for consultation proposed new regulations to better control real estate exposures in the banking industry.
It said in a statement that the primary objective of the proposed framework is to enhance financial stability by redesigning regulatory measures.
The refined measures are expected to improve flexibility for bank lending to the real estate sector, while ensuring that banks with higher real estate exposures, above a set threshold, will be subject to supplemental regulatory requirements.
In addition, through the application of a backstop, the proposed measures avoid excessive real estate exposures and encourage banks to maintain diversified assets, the statement added.
Lending to the residential real estate sector stood at AED243.5 billion ($66.3 billion) in 2018 while the total domestic credit extended by banks was just over AED1.5 trillion.
The Central Bank said it has invited banks to provide comments on the proposed framework through the UAE Banks Federation by October 31.
Earlier this week, Reuters quoted Abdul Aziz al-Ghurair, head of the UAE Banks Federation, as saying the move is to protect the whole economy, as “you can’t have all your lending in one sector”.
Earlier this year the Dubai Government set up a new real estate committee to ensure a better supply balance in the emirate through greater collaboration between government-related entities and private sector companies
Source: arabianbusiness
