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    November 21st 2019Dubai News, Real Estate

    UAE plans to loosen cap on bank lending to property industry

    UAE banks can currently lend as much as 20 per cent of customer deposits to the property industry

    The United Arab Emirates’ central bank is working on new rules that will loosen the cap on bank lending to the struggling real-estate industry.

    UAE banks can currently lend as much as 20 per cent of customer deposits to the property industry. That will be raised to a still-undecided figure but lenders that exceed 20 per cent would incur a capital charge, central bank Governor Mubarak Rashed Al Mansoori said in Abu Dhabi on Sunday.

    “We need to be flexible,” Al Mansoori said at a conference. But banks would “need to assess the risk-return profile of this investment. Is it worthwhile, do I want more capital?”

    Banks in the second-biggest Arab economy have called on policy makers to loosen the limit amid a property slump that has affected lending.

    Al Mansoori also said that the UAE economy is expected to expand 2.4 per cent in 2019 and accelerate at a faster pace next year.

    UAE banks’ third-quarter non-performing loans stood at 6.4 per cent, compared with 5.7 per cent in the year-ago period, he added.

    All rights reserved to the initial publisher for Gulf News.

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