Combating coronavirus: No need to pay instalment, interest during deferred period, says Central Bank

Dubai - Any interest accrued during the deferment period on the principal amount will be paid by the customer at a later date.

The UAE Central Bank on Sunday said that customers affected by the Covid-19 coronavirus will not be required to pay installments, including principal and interest amount, during the agreed deferred period with banks.

But any interest accrued during the deferment period on the principal amount will be paid by the customer at a later date, which is agreed with the bank, said a statement issued on Sunday.

The regulator urged that banks should not charge interest/profit on the deferred interest/profit amounts.

Under its Dh256 billion Targeted Economic Support Scheme (Tess) announced earlier this month, Dh50 billion were allocated as liquidity relief for eligible customers who wish to apply for a deferment.

The Central Bank expects all banks to fully participate in the stimulus programme to actively mitigate the repercussions of Covid-19 pandemic and provide necessary relief measures. It will begin to publish data of funds used by individual banks under the stimulus package from May 2020.

30% of funds utilised

Abdulhamid Saeed, governor of the Central Bank, said banks have already utilised over 30 per cent of allocated funds from the Tess facility and are actively passing on these funds to their customers affected by the Covid-19 pandemic.

"We will continue to work closely with banks and financial institutions to accelerate their full utilisation of the Tess. This requires banks to closely collaborate with us and intensify their efforts to implement the economic stimulus package for the benefit of the banking sector and the UAE economy," he said.

Closely monitoring

The regulator said it is "closely monitoring banks' utilisation of the Tess programme for the benefit of individuals, SMEs and other private corporates affected by Covid-19 pandemic". It urged banks to process more applications from individuals, corporates and SMEs whose business operations are affected by the pandemic.

The regulator has mandated banks to accelerate the account opening time to a maximum of two days for SMEs, unless banks identify the customer as high risk from an anti-money laundering perspective.

Additionally, banks shall not be allowed to require their SME customers to have a minimum account balance amounting to over Dh10,000. This measure is aimed at providing banks' customers with economic relief and to facilitate the continuation of business operations in the UAE.

waheedabbas@khaleejtimes.com