The Central Bank: Two billion dirhams, the minimum bank’s capital

Significant recovery in loan demand during the first quarter

Expectations of increased demand for loans by individuals and businesses during the second quarter.

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The Central Bank stated that the results of the quarterly credit survey for the first quarter of this year revealed a remarkable recovery in borrowing, whether for companies or individuals, indicating that the first three months of 2021 witnessed an easing in the borrowing restrictions and standards set by banks as a result of the outbreak of the Corona epidemic. ».

"The Central Bank" stated that the respondents in the survey expressed their optimism for the next quarter, whether on the level of increased demand by consumers and businesses or on the one hand to further ease restrictions and standards.

He pointed out that according to the survey, credit standards for business and personal loans are expected to decline further during the second quarter compared to the first quarter of 2021.

Companies

The Central Bank clarified that according to the survey participants, the demand for loans increased significantly among large local companies, traditional loans and Islamic loans, indicating that among the main factors that contributed to this was the increase in dealers' sales and the positive outlook for the real estate market.

As for the second quarter, the survey results revealed an optimistic view and continued strengthening of the demand for business loans in all emirates of the country, while credit standards are expected to decline further for both small and medium companies alike, as well as large companies.

Individuals

The results of the survey showed that the demand for personal loans in general remained positive, which is attributed to the strengthening of demand in all Emirates, especially in Dubai, where it was evident in the branches of “personal loans - credit cards”, “conventional loans”, and “housing -” Investment ».

Survey respondents indicated that the rise in demand was mainly driven by financial market and housing market expectations.

capital

On the other hand, the Central Bank stated that all banks, including branches of foreign banks operating in the country, must maintain at all times a minimum of the paid-up capital, indicating that existing banks that do not meet the requirements of this system when it comes into force , It must fulfill these requirements no later than December 31, 2023.

The Central Bank added, in a system published yesterday on its website, that this minimum paid-up capital must be kept on an ongoing basis, and it is considered a prerequisite for licensing, explaining that banks established in the country must maintain fully paid up capital of not less than two billion dirhams, while the The specialized banks established in the state must maintain a paid-up capital of not less than 300 million dirhams.

He indicated that foreign bank branches must maintain fully paid up capital of not less than 100 million dirhams at the branch level, and qualified capital of not less than two billion dirhams or its equivalent at the entity level.

Foreign banks

The Central Bank clarified that the minimum capital requirement under this system must be met only with fully paid up capital. As for foreign bank branches, the fully paid up capital at the branch level means the funds allocated to the branch and its characteristics are as follows: It is not subject to any restrictions, earmarked funds that do not receive any interest on it, and earmarked funds paid in UAE dirhams only, and the headquarters of the branch has signed an undertaking to cover any shortage in the fully paid capital.

sanctions

The Central Bank emphasized that the banks that breach or are likely to violate the minimum requirements of the paid-up capital must immediately notify it of this.

He mentioned that any violation of any of the provisions of this system may lead to the taking of supervisory measures and penalties, according to what the Central Bank deems appropriate. The Supervisory Development Department at the Central Bank is the reference in interpreting the provisions of this system.

• The first 3 months of 2021 witnessed an easing of borrowing restrictions and standards.

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