Bank lending rates cut by UAE Central Bank
A two-percentage cut point in the lending rate to 3 percent by the Central Bank of the United Arab Emirates (UAE) was announced on Wednesday.
A report issued in this concern also informed about the lowering of the rate on its re-purchase of certificate of deposit (REPO) from 2 percent to 1.5 percent with effect from Wednesday.
Khalil Mohammed Sherif Folathi, Chairman of the bank's board of directors, informed, “The move is in line with the new level of interest rate on the U.S. Dollar Federal Funds.”
He further added that the UAE banking sector is strong and the capital reserve has reached 13 percent, much above the 8 percent level approved by the Basel Convention.
Folathi informed, “The total mortgage lending by the banks in UAE does not exceed 11 percent of the total assets and 18 percent of the total deposits, which is clearly below the 20 percent level approved by the law.”
On 22nd September, the UAE Central Bank announced an emergency lending facility worth 50 billion dirhams (13.6 billion U.S. dollars) to be set up by it, for banks functioning in the country in a bid to boost local banks' liquidity.
But, in spite of the establishment of this facility, the credit crunch situation has not eased in the Gulf country. Back on September 23rd, the Emirates Interbank Offered Rate was 3.64375 percent and on Monday it rose to 4.51875 percent.
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