Dubai: The Central Bank of the UAE (CBUAE) said on Saturday that, to date 77 per cent of the Dh50 billion liquidity facility provided by it to the UAE banking sector as part of the Targeted Economic Support Scheme (TESS), equivalent to Dh38.5 billion is already drawn-down by leading local banks.
To incentivise banks and finance companies to draw-down more from the TESS liquidity zero cost funding facility designated to be used by impacted private corporate customers, small and medium enterprises (SMEs0 and individuals, the CBUAE has issued a notice that includes additional clarifications on the deferral requests under the TESS and aims to further facilitate the implementation of the scheme.
Following the CBUAE notice all banks and finance companies are required to consider the specific circumstances of impacted borrowers to receive a deferral of repayment within the TESS, as options for granting deferrals include the options such as deferment of principal only; deferment of both interest/profits and principal repayment, and deferment of interest/profits only
The notice highlighted that the most in-demand option will be for the deferment of both interest/profits and principal repayment, unless the borrower’s circumstances allows for accepting other options.
“CBUAE welcomes initiatives taken by banks to support and relieve their impacted customers without drawing against the TESS programme which is available to them,” the apex bank said in a statement.
A total of Dh256 billion stimulus announced by the CBUAE includes a liquidity relief tool of Dh50 billion offered through banks to eligible customers who wish to apply for a deferment.
Those eligible customers impacted by the effects of the pandemic will not be required to pay their respective bank any installments, consisting of principal and/or interest/profit, for the agreed deferment period. However, any interest/profit accrued during the deferment period on the principal amount, will be paid by the customer at a later date, to be agreed upon with their respective bank. Banks should not charge any interest/profit on the deferred interest/profit amounts, as per the conditions set by the the CBUAE.
Earlier this month CBUAE said it was closely monitoring banks’ utilisation TESS funds. The Governor of the Central bank of the UAE (CBUAE) met with CEOs of all banks on April 12, 2020 to discuss the implementation of the TESS.
As part of its ongoing mandate to safeguard consumers, the CBUAE developed detailed regulations and guidelines in relation to the TESS. The CBUAE urged banks to draw-drown the allocated funding and support the economy by supporting corporates, SMEs and individuals whose business operations are affected by the implications of COVID-19 pandemic and banks are expected to retain sound lending standards and are required to treat all their customers fairly.
First Abu Dhabi Bank 100%
Emirates NBD 100%
Dubai Islamic Bank 100%
Emirates Islamic Bank 100%
Noor Bank 100%
National Bank of Fujairah 100%
Commercial Bank International 100%
Bank of Sharjah 100%
Invest Bank 100%
Arab Bank for Investment & Foreign Trade 93%
Arab Bank 76%
Mashreq Bank 73%
Sharjah Islamic Bank 67%
United Arab Bank 57%