DUBAI,(Reuters) – The United Arab Emirates will establish the Emirates Development Bank (EDB) with $10 billion dirhams ($2.7 billion) in capital to fund real estate and industrial projects and diversify the economy, Gulf Arab state’s finance ministry said.

The funds will be used to help citizens build property, establish a business and fund agricultural or craft-related projects, the UAE Finance Ministry said in a statement,

The plan to set up the EDB dates back to 2008 when the UAE government said it would merge Islamic lenders Tamweel and Amlak — both hit badly by the collapse of Dubai’s real estate sector — and fold them into a little-known state-run entity called Real Estate Bank.

That in turn was to be combined with Emirates Industrial Bank (EIB) to form the EDB. But the plan did not materialise and Tamweel became majority-owned by Dubai Islamic Bank in 2010.

The economy of the world’s No. 4 oil exporter has been recovering in 2011 from a $25 billion debt restructuring at Dubai’s flagship conglomerate Dubai World .