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Article (13) Credit Exposure Restrictions

C 3/2023 Effective from 29/9/2023
13.1A Finance Company’s Credit Exposure to a single borrower or group of Related Entities is considered as a Large Credit Exposure, where its value is equal to or exceeds 7% of the Finance Company’s Aggregate Capital Funds. For the purpose of calculating the value of a Large Credit Exposure, a Finance Company may consider whether to deduct any of the following items:
 
a.Provisions;
 
b.Cash collaterals;
 
c.Bank guarantees from U.A.E. Banks; and
 
d.Sovereign guarantees.
 
 The items listed under the letters b, c and d of this Article must be legally enforceable.
 
13.2The aggregate amount of Large Credit Exposures must not exceed 100% of the Aggregate Capital Funds of a Finance Company.
 
13.3In addition to Article 13.2, the Central Bank has defined maximum permissible Credit Exposure limits, as shown in Table 1 below.
 

Table 1: Maximum Credit Exposure Limits

BorrowerAggregate percentage of Aggregate Capital FundsIndividual percentage of Aggregate Capital Funds
A single borrowerNot applicable10%
A group of Related EntitiesNot applicable15%
Principal Shareholders and their Related Entities20%10%
Subsidiaries and Affiliates of a Finance Company20%10%
Board membersNot allowedNot allowed
Employees of the Finance Company2%Maximum 20 times of salary
External auditors, consultants and lawyers of a Finance CompanyNot allowedNot allowed

 

13.4Where a Principal Shareholder is also a member of the board of directors of a Finance Company, Credit Exposures will be considered within the Principal Shareholders' Credit Exposure limits.