Dubai: The UAE’s banking sector is actively participating in the Targeted Economic Support Scheme (TESS) by supporting individuals small and medium-sized enterprises (SMEs) and other private corporates affected by COVID-19 pandemic, according to Central Bank of UAE (CBUAE).
The CBUAE data showed utilisation of allocated funds, which have nearly doubled in one-week period reaching over 60 per cent of the Dh50 billion liquidity facility offered under TESS, which is equivalent to Dh30 billion total utilisation of allocated funds.
In the first week since the announcement of TESS, UAE banks were down 30 per cent. The scheme was launched on March 15.
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.
“In our efforts to protect impacted individuals and ensure continuous operations of private corporates and SMEs; the CBUAE constantly directs banks and finance companies to implement regulations and guidelines issued within TESS programme. This will ensure banks’ effective, full utilisation and swift response for the benefit of the affected customers,” the Central Bank said in a statement last week.
As part of its ongoing mandate to safeguard consumers, the CBUAE developed detailed regulations and guidelines in relation to the TESS. Banks are urged to process more applications from individuals, corporates and SMEs 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.