10 09 2020

Business support by the UAE Central Bank. COVID-19

Business support by the UAE Central Bank. COVID-19

In connection with the emergence of the coronavirus, the UAE Central Bank has decided to allocate 100 billion dirhams to help corporate and retail clients. The funds can increase the chance to cope with the financial difficulties that have arisen.

The amount of 100 billion will be formed from two parts:

1 - From the fund of the Central Bank of the Arab Emirates, by providing loans with a 0-th rate for all banking institutions. 50 billion dirhams allocated.

2 - From the reserves of banking institutions. 50 billion dirhams allocated.

World Health Organization has officially called COVID-19 not just a local epidemic, but a global one. The methods of the Central Bank of the United Arab Emirates are aimed at helping clients, not only in the corporate sector, but also in the retail sector, in these difficult times. All of the above measures will be applied immediately after the decision of the UAE Central Bank.

The entire banking system of the United Arab Emirates has a commendable assessment of capitalization. Banking institutions have impressive reserves of funds, at the same time, which are minimal, according to prudential norms.

The Central Bank will require banks to take into account a reasonable time frame when requesting additional collateral, prior to the liquidation of securities that are pledged in the face of a market decline and will issue guidelines on margin requirements to reduce the level of market volatility and provide more flexibility to investors.

The Central Bank implements a set of rules, in accordance with which, banking institutions must open an account for companies of various sizes, namely, for medium and small-sized businesses, for a period of no more than 2 days upon submission of the necessary package of documents from the business, and also, subject to compliance with legal requirements. Also, the banks received a recommendation to provide concessions to the bank's clients, namely, corporate and retail, for up to six months.

According to data, the size of the foreign currency reserve fund in the Central Bank is 405 billion dirhams, which is a sufficient amount to maintain the exchange rate of the national currency and maintain stability in the financial sector throughout the United Arab Emirates.

The central bank is also ready to take measures aimed at regulating and reducing fees on credit and debit cards.