UAE's Tess scheme benefits more than 300,000 customers, Central Bank says

Lenders have drawn down Dh44.7b of Dh50bn liquidity facility

The Central Bank of the UAE praised the UAE leadership for its efforts in aiding the country's economic recovery. Ryan Carter / The National

More than 300,000 individuals have benefited from the Targeted Economic Support Scheme (Tess) rolled out to mitigate the impact of Covid-19, the UAE Central Bank said on Thursday following a meeting with some of the country's largest banks.

About 10,000 small and medium-sized enterprises (SMEs) and more than 1,500 private sector companies also used the economic stimulus, the banking regulator said.

Separately, state news agency Wam reported that banks and financial institutions have availed Dh44.72 billion of the Dh50bn worth of interest-free loans as part of the Tess facility until the end of July.

The central bank first rolled out Tess in March as it unveiled a Dh100bn stimulus package to support companies and individuals affected by movement restrictions and other measures taken to stop the spread of the Covid-19 pandemic. This included Dh50bn of zero-cost collateralised loans and a loosening of banks' capital requirements, giving them more firepower to lend. Further loosening of capital and liquidity buffers has since increased the size of this stimulus to Dh256bn. The Tess scheme ends on December 31.

“The Central Bank of UAE reaffirms its commitment towards enhancing monetary and financial stability in the country through effective supervision, partnership with financial institutions and a sustained and robust financial infrastructure,” Abdulhamid Saeed, governor of the Central Bank of the UAE, said.

“The continuous focus of banks on key financial ratios coupled with the need to provide assistance to impacted customers was required to ensure systemic financial stability in the country.”

Participating banks were instructed to use the funding to offer 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 per cent for first-time expatriate buyers and 15 per cent for Emiratis.

For businesses, the regulator ordered lenders to remove requirements for SMEs to have a minimum account balance of Dh10,000 before opening accounts and urged them to speed up account opening times to two days.

According to the Central Bank statistics, lenders availed Dh44.38bn from the Tess facility until the end of June, Dh42.33bn until the end of May and Dh31.85bn by the end of April.

The meeting also discussed banks’ systemic stability and the importance of having robust controls to mitigate the risks of money laundering and financing of terrorism in the UAE.

The central bank also updated the chief executives on the results of the sanctions screening tests conducted by the newly created Anti Money Laundering and Combating the Financing of Terrorism unit on licensed financial institutions in the UAE.

“CBUAE’s supervisory and regulatory initiatives are also focused on verifying UAE banks comply with their legal obligations under the UAE anti money laundering legislation to ensure the country’s commitment to applying the Financial Action Task Force standards and its standing as a financial centre of repute,” Mr Saeed added.