The Board of Directors of the Central Bank of the UAE (CBUAE) reviewed the Targeted Economic Support Scheme (Tess) which was initiated to reduce the impact of COVID-19 by easing the tensions in financing and liquidity, lending capacities and addressing operational challenges.
The council has recommended conducting a reassessment on the development of the program in March and April 2021 and discussed the need for extending the Tess scheme.
Since its initiation, the Tess scheme has benefited more than 300,000 individuals and about 10,000 small and medium-sized enterprises (SMEs) while more than 1,500 private sector companies used the economic stimulus packages.
The scheme was first launched in March by the Central Bank as it unveiled a $27 billion stimulus package to aid the companies as well as individuals to recover from the impact of movement restrictions and other measures taken to curb the pandemic.
The package further included $13.6 billion of zero-cost collateralized loans and relaxation in the bank’s capital requirements to give them more power to lend. Further, loosening of capital and liquidity buffers has since increased the size of this stimulus to $69.6 billion.
Participating banks were asked to use the funding to provide temporary relief to the private sector and retail customers for a period of up to six months. Banks also increased the loan-to-value ratio on mortgages to 20 percent for first-time expatriate buyers and 15 percent for Emiratis.
The regulator has also instructed the lenders to remove the minimum account balance requirements for SMEs before opening accounts and urged them to fast track account opening procedures.
The meeting further discussed the plan to slowly implement Basel standards in three stages, which is a global framework to strengthen the capital requirement of banks.
The first stage is planned to be implemented by the second quarter of 2021 and the following stages will be rolled out by the fourth quarter of 2021 and the second quarter of 2022 respectively.