Capital adequacy regulations were introduced by the Central bank
of the UAE on 1st February to ensure if the capital adequacy of all
banks operating in the UAE is aligned with the revised rules
outlined by the Basel Committee on Banking Supervision in Basel
III, a global regulatory framework. These regulations are further
supported by accompanying standards, which elaborate on the
supervisory expectations of the Central Bank with respect to
capital adequacy requirements. They are issued in accordance with
the powers bestowed in the central bank under the Central Bank
Law.
According to the Central Bank, to encourage the effective and
efficient development and functioning of the banking system, banks
are required to manage their capital in judicious way. A strong
capital must support the risk taken by the banks to maintain
stability of the financial system of the UAE.
