Banks in the United Arab Emirates have decided to lower interest rates on personal loans to 7 percent as of June 1, a newspaper reported on Tuesday citing banking sources.

The central bank said on Thursday it had asked banks operating in the Gulf state for feedback on a proposed change to interest rates and charges on personal loans.

The cut would affect car, personal finance and housing loans, Al-Khaleej newspaper said without identifying the source of the report.

'Most banks' credit is currently focused on individuals and personal loans, especially after they had curbed financing for some of other sectors,' the paper said, citing banking sources.

Liquidity had improved and interbank lending was returning to the same levels seen before the global economic crisis, the sources said.-Reuters