CBUAE developed detailed regulations and guidelines in relation to the Targeted Economic Support Scheme (TESS) in response to the COVID-19 crisis. The Governor of CBUAE met with CEOs of all banks on April 12, 2020 to discuss implementation of the TESS program. CBUAE notified that it is closely monitoring banks’ utilization of the TESS program for the benefit of individuals, small and medium-sized enterprises (SMEs), and other private corporates affected by the pandemic.
Since the launch of TESS on March 14, 2020, a total amount of AED 10 billion has been provided to banks in the form of zero interest funding and over AED 61 billion in the form of lowered cash reserve requirements, which are to be deployed to directly benefit companies and consumers who have been adversely impacted by the pandemic. As part of its ongoing mandate to safeguard consumers, CBUAE developed detailed regulations and guidelines in relation to the TESS program:
- Banks are urged to process more applications from individuals, corporates, and SMEs whose business operations are affected by the implications of COVID-19 pandemic.
- Banks are expected to retain sound lending standards and are required to treat all their customers fairly.
- During the validity of the TESS, which runs up to the year-end 2020, banks are expected to postpone the payments of interest and/or principal of loans for customers; individuals, SMEs and other private sector companies affected by the repercussions of the COVID-19 pandemic. The TESS program includes a liquidity relief tool of AED 50 billion offered by CBUAE through banks to eligible customers who wish to apply for a deferment. The eligible customers impacted by the effects of the pandemic will not be required to pay their respective bank any installments, consisting of principal and/or interest/profit, for the agreed deferment period. However, any interest or profit accrued during the deferment period on the principal amount will be paid by the customer at a later date, to be agreed upon with their respective bank. Banks should not charge any interest or profit on the deferred amounts.
- CBUAE 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.
- Banks shall not be allowed to require their SME customers to have a minimum account balance amounting to over AED 10,000. This measure is aimed at providing banks’ customers with economic relief and to facilitate the continuation of business operations in the UAE.
- Additional measures taken by CBUAE include the decrease of the minimum required down payment, to increase the affordability of real estate.
CBUAE confirms the progress in the implementation of TESS by banks and finance companies for the benefit of individuals, SMEs and other private corporates affected by COVID-19 pandemic. CBUAE welcomes banks’ active utilization of allocated funds, which have doubled in a one-week period. CBUAE constantly directs banks and finance companies to implement regulations and guidelines issued within TESS program.
- Press Release on Regulations and Guidelines in relation to TESS (PDF)
- Press Release on Progress in Implementation of TESS (PDF)
- Press Release on Meeting on Implementation of TESS (PDF)
Keywords: Middle East and Africa, UAE, Banking, COVID-19, Governance, SME, Credit Risk, CBUAE
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous ArticleESAs Propose Regulatory Standards on ESG Disclosures
The UK authorities have published consultations with respect to the Basel requirements for banks. The Prudential Regulation Authority (PRA) published the consultation paper CP16/22 on rules for the implementation of Basel 3.1 standards.
The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.
The Financial Stability Board (FSB) and the Network for Greening the Financial System (NGFS) published a joint report that outlines the initial findings from climate scenario analyses undertaken by financial authorities to assess climate-related financial risks.
The Financial Stability Board (FSB) published a letter intended for the G20 leaders, highlighting the work that it will undertake under the Indian G20 Presidency in 2023 to strengthen resilience of the financial system.
The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.
The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.
The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups
The European Union has finalized and published, in the Official Journal of the European Union, a set of 13 Delegated and Implementing Regulations applicable to the European crowdfunding service providers.
The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.
The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.