The UAE's central bank has told banks they may be allowed to exclude bonds issued by state-linked entities from planned lending limits slated to take effect later this year, a local newspaper said.

In April, the central bank expanded its large-exposure limit rules for commercial banks, introducing new caps for loans made to local governments and their entities in the first such change in nearly two decades.

The ruling would cap lending at 100 percent of a bank's capital base to governments of the seven-member UAE federation and their non-commercial entities, and 25 percent to individual borrowers.

Arabic language daily Al Khaleej, citing unnamed banking sources, said the central bank has notified banks on an informal basis that "in principle it does not oppose excluding bonds issued by government companies subscribed to by the banks from the permitted credit ratio."

The move is to help banks meet the new exposure targets in the appropriate timeframe, the newspaper said.

A number of UAE banks - including the country's big two, Dubai's Emirates NBD and National Bank of Abu Dhabi - are over the limit and have said they would discuss with the authorities about how to manage their balance sheets in light of the rule change.

In May, the central bank said it may grant exemptions to some banks by potentially extending the September 30 deadline.

The UAE is still recovering from its 2009-2010 corporate debt crisis. Banks' provisions against bad loans rose 25 percent from a year earlier to 55.3 billion dirhams ($15.1 billion) last December, central bank data show.

Officials at the central bank were not immediately available for comment. - Reuters