a.ELAR is a ratio of the stock of eligible liquid assets to total liabilities (excluding liabilities allowed in the regulatory capital base). It is a measure that aims to ensure that banks hold minimum buffers of liquid assets.
b.Eligible liquid assets under ELAR are:
i.Account balances at the Central Bank;
ii.Physical cash at the IB;
iii.Central Bank Islamic CDs and other Central Bank’s other Islamic instruments;
iv.UAE Federal Government Sukuk;
v.Reserve requirements;
vi.UAE local government and Public Sector Entities’ publicly traded Shari’ah compliant securities that are assigned 0% credit risk weighting under standardized approach (limited to a maximum of 20% of eligible liquid assets);
vii.Foreign, Sovereign Shari’ah compliant instruments or Shari’ah compliant instruments issued by their central banks, also multilateral development banks all of which receive 0% credit risk weighting under Standardized approach (limited to a maximum of 15% of eligible liquid assets).
c.IBs required to comply with ELAR must hold an amount equivalent to at least 10% (or some other percentage as set by the Central Bank) of their total on balance sheet liabilities at all times in the above assets. This ratio may be subject to upward revisions from time to time either as a result of Central Bank policy or as a result of a recalibration exercise.