The requirement aims to safeguard lenders' capital bases and ensure they do not overextend themselves, four sources told the news agency.
It is common to announce proposed dividends before regulatory approval, but the regulator is keen to end this practice, because there have been cases where the central bank has rejected a proposed dividend, Reuters said.
In November Abdul Aziz Al Ghurair, chairman of the UAE Banks Federation said that the UAE banking sector is bracing itself for a surge in defaults from small and medium sized businesses (SMEs) this year.
UAE banks have seen higher defaults, known as loan impairments, since the start of 2015, and the Federation expects the total impairment from SMEs to reach between Dh5 million ($1.35 million) and Dh7m ($1.9m) for the year, Al Ghurair said.
Many UAE banks are now reviewing their loan portfolios and tightening lending rules, Al Ghurair said.