The United Arab Emirates’ central bank proposed on Thursday a new regulatory framework to prevent banks from becoming overly-exposed to the country’s real estate sector, according to a statement.
“The primary objective of the proposed framework is to enhance financial stability by re-designing regulatory measures aimed at exposures of banks to the real estate sector,” the central bank said.
The bank also encouraged lenders to maintain diversified assets. Lenders across the UAE are expected to respond to the new proposal by October 31, the statement added.
“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,” the central bank said.