Coronavirus in UAE: Abu Dhabi announces three-month relief on EMIs
Dubai - Benefits include deferment of instalments for loans, refund of credit card processing fees, and zero service fees on utility bill payments.
By Ashwani Kumar
Published: Tue 24 Mar 2020, 11:00 PM
Last updated: Thu 26 Mar 2020, 9:29 AM
Three-month relaxation on equated monthly installments (EMIs) of existing and new loans, reduced interest charges, offers on down payments, service charges and school tuition plans, lowered minimum balance requirements are some of the Covid-19 relief measures announced by the Abu Dhabi Government for businesses and general public.
His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces on Wednesday, March 25, ordered a 10-point comprehensive package for individuals and seven initiatives for small and medium sized enterprises (SMEs) through Abu Dhabi-based banks.
With further closures and restrictions from March 25, First Abu Dhabi Bank, Abu Dhabi Islamic Bank and Abu Dhabi Commercial Bank in coordination with the Abu Dhabi Department of Finance and Department of Economic Development Abu Dhabi will provide the much-needed cushion to support the community and businesses. The offers have been categorised into different sections 'impacted by the Covid-19' pandemic and 'all'.
A timely relief
Rajeev Kumar, a sales executive with a private company, said the relaxation on new loans is very tempting, especially with the Indian rupee hitting new lows against dirham.
"Deferred EMIs for three months is a key drawer. Interest-free instalment for school tuition is also a good one. This is a timely order from His Highness," Kumar said.
Dr SD Gopakumar, general manager, Al Jaraf Fisheries, praised the initiatives but hoped such measures are extended to businesses for existing loans also.
"This seems to be a very comprehensive package for all the SMEs. However, ideally the benefits should also be provided to the existing loans not just new borrowings."
Dony Cyril, exhibitions director, DOME, said with all events cancelled and postponed, such measures will help overcome future hurdles.
"We have initiated a complete lockdown from Sunday but would like to fulfill the commitments to our employees and customers. It's a big challenge for us and without the support of financial institutions, we can't overcome this huddle. These initiatives are a good relief. I look forward to employee welfare schemes to ensure everyone's happiness."
Help companies avoid cash crunch
Financial experts said such measures will aid individuals and boost business sentiments.
Adeeb Ahamed, managing director, LuLu Financial Holdings, said that the move will lessen the impending economic hardships of both individual and enterprise level customers. "Deferring installments on existing borrowings by three months will definitely help companies avoid a cash crunch in the short-term. This will lower stress on the working capital and allow companies to pass on the benefit to employees, thus freeing up vital cash and enabling some sense of liquidity in the market."
He added the move will give several businesses a much-needed buffer period.
"Many businesses are hoping to rebound fully in three months' time. But the ongoing situation has an element of uncertainty to it, and no one can predict yet how things will swing from here. So, these measures will at least give businesses in Abu Dhabi a fair starting point to re-assess their goals for a post-emergency situation."
Renuka Gunjahalli, founder, Jupiter Business Mentors, said companies should start tweaking their business model.
"As per one of our surveys, one in five business owners believe climate change and natural disasters pose a threat to their business, but sadly 77 per cent of them do not have a natural disaster plan in place. The ripple effect of this could mean that as many as 40 per cent of small businesses will never reopen their doors following major natural disasters such as these. But with the help of these government backed measures, businesses can stay afloat during such crisis and get back on track after this pandemic," she said.
Relief that covers all sectors
5 Measures for the Covid-19 affected
> Deferment on payment of instalments on existing loans and credit cards till June 30 with no additional bank charges
> Halt on foreclosure on mortgages for defaulted customers till September 2020
> Halt suspension of bank accounts for retrenched customers till September 2020
> Refund credit card processing fees for foreign currency transactions committed after January 1, 2020, associated with cancellation of travel plans
> Installment programmes with no service fees for utility bill payments till June 30
5 Measures for the public
> Defer installments on new loans and credit cards for up to three months for eligible customers until June 30 with 50% reduction in associated bank charges
> Reduction of interest charges on new loans and credit cards for eligible customers based on new prevailing rates for eligible customers
> Reduction of bank charges by 50 per cent on early settlement of existing loans for eligible customers until June 30
> Reduce in down-payment by 5 per cent for first time home-buyers
> Interest-free instalment plans for school tuition fee with waiver of service charges or no interest loan until June 30
7 Measures for SMEs
> Deferment of installments on existing borrowing for up to three months until June 30 with no additional bank charges
> Reduction in bank's merchant service fees by 50 per cent for SME customers with usage below Dh5 million per annum until June 30
> Reduction in banking fees and charges on zero balance accounts by up to 50 per cent
> Reduction in minimum average balance requirements for all SME account categories to up to Dh10,000 per month
> Deferment of install
ments on new borrowing for up to three months until June 30 with 50 per cent reduction in associated bank charges
> Reduction in interest charges on new borrowings based on new prevailing interest rates
> 50 per cent reduction in bank charges on early settlement of borrowings till June 30
Initiatives for public includes deferment on installments and reduced interest charges on new loans, reduced bank charges by 50 per cent on early settlement of existing loans and cutting required down payment for first-time home buyers by 5 per cent. There's also an interest-free installment plan for school tuition with waiver of service charges.
There are four initiatives for SMEs impacted by Covid-19. Deferred installments on existing borrowing, and reduced merchant service fee and banking fees for eligible customers. Also, minimum balance requirement is reduced to Dh10,000 per month. Benefits for all SMEs include delayed payment on new borrowings for three months till June 30, reduced interest charges on new borrowings and up to 50 per cent cut on bank charges on early settlement of existing borrowings.