Abu Dhabi: The banking sector increased their statutory reserves at the UAE Central Bank by Dh8.6 billion during the first half of this year, bringing the total required reserves to Dh125.5 billion by the end of June 2017, according to central bank statistics.
Statutory reserves are the minimum liquidity banks are required to hold against client deposits without getting interests in return.
The required minimum level of compulsory reserves now stands at 14 per cent on current, savings and demand accounts, and 1 per cent on term deposits.
In a move reflecting banks’ commitment to keep high solvency ratios, required reserves have been progressively growing over the first six months of the year, rising by Dh1.9 billion to Dh118.7 billion in February and to Dh119.9 billion by the end of March.
The month of June was the top performer as compulsory reserves surged by Dh3 billion, with May’s levels up Dh2 billion and April’s at Dh699 million.
Compulsory reserves are among the tools used by banks to achieve their fiscal policies in addition to other vessels, including overdrafts, advance facilities, fraud preventive measures, certificate of deposits, Certificates of Deposit Repurchase Agreement, REPO and liquidity support facilities.
