ABU DHABI/November 16-2020: The Central Bank of the UAE (CBUAE) has extended the Targeted Economic Support Scheme (TESS), the key components of its economic stimulus package, for six months, from January 1 to June 30, 2021.
This means the CBUAE will extend the duration of the Zero Cost Facility (ZCF) with a corpus of Dh50 billion for an additional period of six months. This is going to benefit the retail and corporate banking customers and will facilitate liquidity management for banks through collateralised funding at zero cost.
The TESS was launched by the CBUAE in March 2020 to support the UAE’s economy during the COVID-19 pandemic, through a range of integrated relief measures to the banking sector related to funding, liquidity, lending and capital.
Starting from Jan 1
Starting from January 1, 2021, banks and finance companies participating in the TESS will be able to provide new loans and facilities to customers negatively affected by the pandemic within the applicable terms and conditions set by the TESS standards
“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,” said Abdulhamid M Saeed Alahmadi (seen in the picture), Governor of the Central Bank of the UAE.
Central Bank largesse
The Central Bank of UAE had announced a total of Dh256-billion economic stimulus package following the COVID-19 outbreak in March 2020.
This included a liquidity relief tool of Dh50 billion offered through banks to eligible customers, who wish to apply for a loan deferment.
As per the TESS scheme, those eligible customers impacted by the pandemic will not be required to pay their loan instalments, consisting of principal and/or interest/profit, during the deferment period mutually agreed between the bank and the customer.
However, any interest/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/profit on the deferred interest/profit amounts, as per the conditions set by the CBUAE.
TESS scheme was implemented by banks under the close monitoring of the central bank and by mid-May 2020, most leading bank had fully utilised the