Top list: How UAE Central Bank promotes economy, businesses amid COVID-19

June 23, 2020 338

The Central Bank has injected $2.64bln in the form of new loans and $4.08bln in the private sector during the first quarter of 2020

The UAE Central Bank has played a key role in sustaining the growth of the UAE economy as well as propping up businesses doing the COVID-19 trigged crisis.

The Central Bank has injected AED7.9 billion ($2.64 billion) in the form of new loans and AED15 billion ($4.08 billion) in the private sector during the first quarter of 2020. It has also directed banks and finance companies to implement regulations and guidelines to fully finance the economic support plan for individuals, private sector and SMEs.

According to the apex bank, AED30 billion of the economic support plan liquidity, estimated at AED50 billion, has been claimed by various banks.

In its report titled "The UAE Government’s Initiatives to Combat the COVID-19 Crisis", the Federal Competitiveness and Statistics Authority has listed the initiatives of the UAE Central Bank for helping businesses and the economy mitigate the impacts of the pandemic.

The Central Bank has urged banks and financial institutions in the UAE to:

  • Support private sector companies, SMEs and individuals to overcome the repercussions of COVID-19 pandemic, due to their vital role in driving the economic growth in the country.
  • Continue to postpone loan payments for clients affected by COVID-19.
  • Extend debt delay period and interest on the payments due until December 31, 2020 as part of the comprehensive economic support plan.
  • Postpone the implementation of a group of capital measures related to implementing the requirements of “Basel III” until March 31, 2021 for all banks
  • In collaboration with Abu Dhabi Global Market and Dubai International Financial Center, the Central Bank issued a guidance for banks and finance companies on the application of the IFRS 9 international financial reporting standard to take advantage of its flexibility
  • The Central Bank issued new requirements for all banks to apply a precautionary assessment on the provisions for expected credit losses under the IFRS 9 international financial reporting standard to mitigate the impact of the provisions of the said international standard on regulatory capital in light of the expected fluctuations.

The Central Bank has set detailed and comprehensive economic support plan to mitigate COVID-19 impact and to protect consumers:

  • Reduce down payments on property to facilitate real estate purchase
  • Waive the minimum balance stipulation on SMEs bank accounts to exceed AED10,000
  • Require all banks to open accounts for SMEs within a maximum of two days, provided they adhere to the conditions of countering illicit uses.
  • During the validity of the support period (until the end of 2020), the banks will postpone the installments and interest on loans for affected clients.
  • Banks must maintain proper lending standards and treat all clients fairly.
  • Banks should carry out as many transactions as possible for individuals, private sector companies and SMEs affected by COVID-19.
  • Banks boards of directors and executive departments must expedite the implementation of the support plan measures.


Zawya