Dubai : The UAE Central Bank is in the final stages of issuing a circular on new provisioning norms, where the cut-off time for personal loans to be classified as sub-standard will be reduced from the current 180 days to 90 days, Al Bayan newspaper reported yesterday.

Existing regulations require banks to classify personal loans as substandard only when payment of principal or interest is in arrears beyond 180 days.

The new regulation will describe how banks will have to make provisioning against credit cards, personal loans and auto loans in the case of defaults, the paper explained.

Banks will have to take 50 per cent provisions on loans after 90 days of nonpayment, 90 per cent after 180 days and 100 per cent after 210 days, it said.

Meanwhile, the Saudi Arabian Monetary Agency (SAMA), the country's central bank, kept interest rates unchanged in February as lenders remained cautious in the Arab world's largest economy.

SAMA kept its overnight reverse repo rate at 0.25 per cent, and the benchmark repurchase rate at 2 per cent, according to data posted on its website.

Saudi Arabia, which has filled its coffers with surplus income from oil exports this decade, has drawn on its reserves to fund record budgets and keep its $400 billion (Dh1.4 trillion) five-year infrastructure development programme on track.

While this spending helped the Saudi economy grow last year, according to the kingdom's budget released last December, banks have remained hesitant to extend credit.

Lending to the private sector rose to 735.6 billion riyals in January from 734.2 billion riyals in the month earlier. During the boom years, bank claims on the private sector tripled between 2003 and 2008.

SAMA last cut its overnight reverse repo rate by 25 basis points to 0.25 per cent in June in an attempt to spur credit growth in the local economy.

Saudi banks are expected to pick up the pace of credit growth in 2010 but won't match the rates seen during the boom years when claims on the private sector tripled between 2003 and 2008, according to research by Banque Saudi Fransi.