Central Bank of the UAEchapter by chapter

Article 2.1-2.11Article 2: Credit Risk Governance - Board Oversight and Approval Thresholds

The Board must oversee credit risk strategy and policies, approve material facilities above 10% of Tier 1 Capital or related-party facilities every three years, and may delegate lower approvals to a Board Credit Committee within set limits.

Article 2.12-2.19Article 2: Credit Risk Governance - Senior Management and Control Functions

Senior Management is responsible for Credit Risk governance, implementing the framework, with various audit functions ensuring compliance and risk assessment.

Article 3.1-3.9Article 3: Credit Risk Management Framework - Scope and Climate/Country Risk

Credit risk management framework must cover all risk-generating activities, require Board approval for new products, and include climate and country risk policies with country-specific provisioning.

Article 3.11-3.20Article 3: Credit Risk Management Framework - Administration, Monitoring, Re-Ageing and Exceptions

LFIs must maintain credit administration, multi-level monitoring with early warning indicators, a documented days-past-due re-ageing policy for non-distressed restructuring, and Board-approved handling of risk-appetite breaches.

Article 4.1-4.10Article 4: Credit Risk Oversight Functions and Roles - CCO and CRO Detailed Authority

The Chief Credit Officer must independently review obligors and exposures annually with updated risk ratings, while the Chief Risk Officer reviews facilities and holds veto power over credit proposals.

Article 5.1-5.10Article 5: Credit Underwriting - Decision-Making Governance and Independence

LFIs must maintain a documented credit committee or delegation matrix, deferred incentives for large originators, and Board sign-off on all related party facilities.

Article 5.11-5.16Article 5: Credit Underwriting - Key Underwriting Components

Credit underwriting must include risk-limit structuring, due diligence on financial parameters and beneficial owners, enhanced due diligence triggers, collateral registration and verification before disbursement, and legal confirmation of debt-recoverability rights.

Article 6.1-6.5Article 6: Definition of Default - Non-Payment and Overdraft Triggers

Credit default is defined as obligor non-payment over 90 days past due on a material credit obligation exceeding 5% of total funded exposure, or overdraft limit breaches lasting beyond 90 continuous days.

Article 6.6-6.12Article 6: Definition of Default - Unlikeliness to Pay and Cross-Default

Banks must document unlikeliness-to-pay indicators for default, and cross-default applies automatically to material wholesale facilities triggering obligor-level default but not to retail obligor credit facilities.

Article 7.1-7.12Article 7: Significant Increase in Credit Risk (SICR) - Quantitative Indicators

Licensed financial institutions must maintain a documented forward-looking significant increase in credit risk methodology using deferral, days-past-due, qualitative and macroeconomic indicators, with approved exceptions and a watch-list.

Article 8.1-8.7Article 8: Restructuring - Distressed/Non-Distressed Classification and Standstill

Restructurings must be classified as distressed or non-distressed, and a restructuring in standstill for more than 90 days while the obligor fails original obligations is deemed a default event.

Article 8.8-8.13Article 8: Restructuring - Process, Approval and Eligibility

Restructuring must follow a remediation independence principle, undergo annual internal audit review, and meet documented eligibility criteria including maximum restructuring occurrences and fraud screening.

Article 9.1-9.13Article 9: Classification and Provisioning - Stage Classification and Migration Rules

LFIs must classify each Facility into distinct stages and update internal ratings at least annually, with specific rules for migration between stages.

Article 9.14-9.22Article 9: Classification and Provisioning - Stage 1/2 Minimum Provision Floor

Banks must book Stage 1 and Stage 2 provisions quarterly, at least 1.50% of credit-risk-weighted assets, with any shortfall charged to income or held in a non-distributable impairment reserve.

Article 9.23Article 9: Classification and Provisioning - Stage 3 Minimum Provision (Wholesale)

LFIs must apply minimum Stage 3 provision floors to wholesale facilities after collateral and expected cash flows, with facility-specific recovery-based provisioning reviewed by the provisions oversight committee and escalated to the Board.

Article 9.24Article 9: Classification and Provisioning - Stage 3 Minimum Provision (Retail)

Retail Stage 3 facilities, net of collateral, must carry minimum provisions of 25% at 91-120 days past due, 50% at 121-180 days, and 100% beyond 180 days.

Article 9.27-9.38Article 9: Classification and Provisioning - Restructured Facility Classification Rules

Distressed restructured facilities meeting unlikeliness-to-pay, over 90 days past due, or restructured three or more times must be classified Stage 3; non-distressed restructurings with long moratoria or large balloon payments go to Stage 2.

Article 10.1-10.9Article 10: Credit Risk Mitigation - Cash Flow Eligibility and Collateral Haircuts

Credit risk mitigation cash-flow recognition requires present-value discounting, external auditor validation and enforceability opinions, and eligible collateral must be valued at net realisable value with minimum haircuts increasing over time since Stage 3 classification.

Article 10.10-10.12Article 10: Credit Risk Mitigation - Collateral Valuation Conditions and Foreign Jurisdiction Collateral

Islamic LFI collateral must be Shari'ah-compliant, with set valuation timeframes by collateral type and foreign-jurisdiction collateral requiring legal enforceability opinions and auditor-validated independent valuation.

Article 11.1-11.8Article 11: Portfolio Management and Internal Reporting - Monitoring, Aggregation and Data

Licensed financial institutions must monitor credit risk across all instruments, review wholesale obligor ratings at least annually, aggregate risk drivers, and gather internal and external default and recovery data.

Article 11.9-11.11Article 11: Portfolio Management and Internal Reporting - Board Reporting, Risk Mitigation and Restructured Facility Monitoring

Banks must regularly report credit risk trends and underwriting changes to the Board, document risk-mitigating actions, and monitor distressed restructured facilities for at least 12 months.

Article 12.1-12.3Article 12: Non-Performing Assets and Write-Off - NPA Strategy and 5% Stage 3 Threshold

Board and senior management must ensure early identification of rising non-performing asset drivers, maintain a Board-approved NPA management strategy, and, if Stage 3 exposure exceeds 5% of total credit exposure, explain the cause to the CBUAE and implement a reduction strategy reported semi-annually.

Article 12.4-12.9Article 12: Non-Performing Assets and Write-Off - Write-Off Timing, Process and Post-Write-Off Recovery

Licensed financial institutions must write off exposures with no reasonable recovery expectation, and Stage 3 exposures may not stay on the balance sheet beyond five years without full write-off.

Article 13.1-13.5Article 13: Credit Risk Models

LFIs must maintain credit risk models measuring provisions at facility, obligor and portfolio level, with documented overrides, asset grading and data-quality validation controls.

Article 12.9-retRecord Retention — Individual memorandum accounts for each written-off Credit Facility (incl. portf

Banks must maintain individual memorandum accounts for each written-off credit facility, including portfolio-level write-offs, and summarised records for CBUAE review and court claims, until recovery or a decision to discontinue claims.

Article 5.13-retRecord Retention — Credit files (financial statements, financial analyses, internal rating document

Credit files, including financial statements, internal ratings, appraisals and projections, must be retained under record retention rules, with the retention period triggered by credit file creation date.