A draft law designed to boost the resilience of the UAE to financial shocks has been reviewed by Central Bank officials.
The planned Financial Services Law will overhaul existing rules on the regulation of banks and other financial institutions dating from 1980.
The Central Bank's board on Thursday discussed the latest amendments to the draft law, according to a press release from the regulator yesterday.
The board agreed the technical team that was assigned to review financial rules should now discuss the changes.
Plans were announced last year to move oversight of the financial system to a so-called twin-peak model, requiring both a prudential regulator and a conduct-of-business regulator.
Nobody was available from the Central Bank to comment further yesterday. In a country report released last week by the IMF, the Washington-based fund said along with proposed insolvency and public debt legislation, the new law was "crucial" in modernising financial legislation.
The board meeting also reviewed changes to proposed ratios governing how much banks can lend to government-related entities. Officials approved the new limits, which were not specified, after slight amendments, according to the press release.
In April last year, the Central Bank set out limits for commercial lenders' exposure to government departments and holding companies, giving banks six months to comply.
The move met resistance from banks including National Bank of Abu Dhabi, Emirates NBD, Abu Dhabi Commercial Bank and Noor Islamic Bank, which said they were in breach of the limits.
However, no solution had been found by the time the law came into effect, leading the Central Bank to say in October it would put its implementation on hold pending a review.
Last month, the UAE Banks Federation submitted a final proposal on amending the large exposure limits to the Central Bank, calling for bonds and sukuk to be excluded from the cap and asking for five years to implement the plan.
"From the banks' perspective the most important thing is time because it's going to take a long time to bring down their exposures," said Catherine McDougall, a senior legal consultant at DLA Piper.