UAE central bank issues new regulation for specialist banks

The financial institution of the UAE has issued a replacement regulation covering licensing, prudential and conduct requirements for specialised banks.

The objective of the new regulation is to supply a regulatory framework during which specialized banks can operate within the UAE financial sector during a “robust and prudent manner,” the CBUAE said during a statement.

Specialized banks are allowed to conduct their activities within the UAE Dirhams only and operate consistent with a coffee credit risk model, said the statement.

They can be established either as a standard specialized bank without Sharia-compliant offerings, or as a specialized Islamic lender, the regulator said.

Banks are licensed under the CBUAE’s new regulation and are allowed to practice different financial activities to serve the area people , like account opening, card issuance, and retail and wholesale lending.

They are permitted to supply services to UAE nationals and UAE residents only.

The regulation sets a minimum paid-up capital requirement of AED300 million (USD81.6 million) that specialized banks must maintain and a risk-based capital adequacy requirement that they ought to continuously adhere to, the banking regulator said Saturday.

It also sets the whole consolidated assets of specialised banks at a maximum of AED25 billion (USD6.8 billion).

“The CBUAE stresses the importance of specialised banks’ compliance with all regulations, standards and notices issued for the banking sector, except where there are specific provisions contained within the new regulation which apply to specialized banks only,” the financial institution said.