Central Bank of the UAE (CBUAE) will be extending the validity of its Targeted Economic Support Scheme (TESS) economic stimulus package till 30 June 2021 to continue boosting the economy during the pandemic.
From 1 January 2021, banks and finance firms involved in the scheme will be able to provide clients affected by the pandemic with new loans and facilities under the appropriate terms and conditions laid down in the TESS standards.
Under this new extension, the CBUAE will increase the term of the Zero Cost Facility (ZCF) of $13 billion (Dh50 billion) which assists retail and corporate banking clients and enables liquidity management for banks through collateralized funding at zero cost, for an extra six-month period.
The scheme was first launched in March 2020 to aid individuals and private sector companies across a variety of combined banking sector relief initiatives associated with finance, liquidity, lending and capital. Recently, CBUAE reviewed the performance of the TESS scheme amid the pandemic situation.
“The Central Bank remains committed to supporting the financial system of the UAE by taking the required measures to accelerate economic recovery from Covid-19 repercussions. The extension of applicability period of the TESS will provide relief for retail, small and medium-sized enterprises, and corporate banking customers. We believe that this initiative will shield the economy from the impact of the pandemic and place us in an ideal position to recover, once the pandemic is over.”
Emirates NBD Research’s MENA (Middle East & North Africa) economist Daniel Richards said that banks would be able to offer deferments to customers who qualify under this scheme for assistance. This will benefit around 321,500 individuals and organizations.
To date, more than 310,000 retail customers, almost 10,000 small and medium-sized businesses and more than 1,500 private sector businesses have availed the benefits of the TESS loan deferral program.
A phased implementation schedule of the remaining parts of the Basel III compliance project has also been declared by the Central Bank of the UAE in three phases, starting from second quarter (Q2) of 2021 to Q2 2022 and will be based on international regulatory standards.