How Will Your Bank in UAE Help If You Are Impacted By COVID-19?
The lenders across the various Emirates have rolled out measures to ease the financial burdens on both the retail and the business customers.
The economic ramifications all across the globe that have been caused by the coronavirus and the measures taken to contain it, have got the various banks and regulators stepping out in order to offer financial relief for their retail and business consumers.
The UAE Central Bank unveiled in mid-march an economic stimulus package that was worth AED 100 billion. The lenders all across the emirate region were asked to treat their customers in a fair manner and grant the retail clients a temporary relief on their loan payments (for example the payment of their personal loan interest rate in UAE) for a period of up to 6 months from 15th of March.
The Scheme of Targeted Economic Support includes an amount of AED 50 billion from the funds of the central bank via collateralized loans at 0 costs to all of the banks that are in operation in the UAE and an amount of AED 50 billion in funds that are freed up from the capital buffers of the banks.
The biggest bank by its assets in the Dubai region – Emirates NBD along with the largest Shariah-compliant lender in the UAE – Dubai Islamic Bank, Mashreq, Commercial Bank of Dubai, and Emirates Islamic announced a number of support measures taken by them that came in effect for a period of 3 months from 1st April.
In Abu Dhabi, the Abu Dhabi Islamic Bank along with the Abu Dhabi Commercial Bank is also offering measures to support its customers by introducing 17 initiatives to support the businesses as well as the individuals.
Apart from these, in the other emirates, banks such as RAKBANK, Commercial Bank International, and Sharjah Islamic Bank have also pledged to help out their customers.
The measures taken in the UAE to contain this deadly virus that has caused the WHO to declare a pandemic, such as self-isolation directives along with flights being canceled, could lead to a decline in terms of revenue for the various businesses, and also a reduction in the income of the individuals along with job losses for some.
It is a good sight to see the banks of UAE maintain stability and provide such support to their users. Some banks have even taken up their initiatives a level up by setting up dedicated phone numbers along with email accounts in order to provide support for the various retail and business clients that have been affected financially by this crisis.
Below in this thread is an outline of how the banks in the Gulf country are helping their individual customers along with the businesses ease their financial burden caused by this virus.
Mashreq, Emirates NBD, Emirates Islamic, Dubai Islamic Bank, and Commercial Bank of Dubai
The following are the measures taken by these banks to ease the customers up during these unstable times:
- Any retail loan customers that have been sent on unpaid leaves can request their respective banks to offer a repayment holiday for a period of up to 3 months charged at a 0% interest rate and no fee.
- Any customers with payments of personal loan interest rate in UAE, payments of a car loan, or mortgages can apply to obtain a repayment holiday for a month with no fees.
- Any charges applicable on cash withdrawals using debit cards via the ATMs of other banks will be refunded.
- The people buying a home for the first time can take advantage of a 5% increase in the loan to value ratio along with the entire processing fee being waived off.
- The customers holding credit cards can enjoy installment plans at 0% interest for any school fee payments and also the grocery purchases for a period of up to 6 months with a zero processing fee.
- The customers who have booked any travel plans with their debit or credit cards can receive a refund of the foreign currency charges via the bank.
- The credit card customers can enjoy a reduction by half in the cash advance charges.
- The customers with small businesses having equipment loans, business vehicle loans, or merchant loans can request for a repayment holiday for a period of up to 3 months along with no fee and zero interest rate.
- The minimum balance per month that is required to open a basic business account for banking will be reduced to an amount of AED 10,000 and the charges for minimum balance will be waived off for 3 month period.
Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, and First Abu Dhabi Bank
There are 5 relaxations taken for those that have been impacted by the COVID-19 and 5 relaxations applicable for all.
For the affected individuals:
- A payment holiday of 3 months applies to the customers with existing credit cards and loans along with no bank charges.
- Any mortgage foreclosure will be on a halt till 30th
- The freezing for bank accounts of individuals is stopped for those that have had salary cuts or have been made redundant until 30th
- Refund for all foreign currency transactions made after 1st January along with canceled travel plans.
- No-fee installments for utility bill payments.
- There is an applicable 3 month payment holiday on new credit cards and loans with reduced charges of 50%.
- Reduced interest rates on new loans.
- Early settlement charged by the bank for existing loans will be reduced to half.
- The down payment that is required by the first time buyers with Dubai banks will be cut by 5%.
- Installment plans with zero-interest for payment of school fees are available.
For the affected businesses:
- Loan payment deferment for a period of up to 3 months for existing borrowers.
- The merchant fee charged by the bank is to be cut into half for the SME consumers with the credit card transactions per year of less than AED 5m.
- The fee and charges of the bank are to be reduced by up to 50% for the accounts that are zero-balance in nature.
- As per the guidelines laid out by the central bank, the SME accounts’ minimum monthly balance is reduced to an amount of AED 10,000.
- A payment holding for 3 months is applicable to the new borrowers along with reduced 50% charges.
- The new borrowing’s interest charges (for example personal loan interest rate in UAE) are to be reduced.
- Early settlement charges by the bank for existing loans to be reduced by half.
The bank has said to work with their clients in a case-by-case manner in order to provide them with flexible solutions to manage the various challenges they may face such as illness from this virus or pay disruption.
- An applicable payment holiday of 3 months on personal loans and car loans.
- An applicable payment holiday of 1 month on credit card dues.
- One-time discount offered by the bank of up to 50% on the overdue transaction charges.
- The clients can convert their electronic and education credit card spending into an Easy Payment Plan with a 0% rate and no processing fee for a period of up to 24 months.
- The bank has introduced its SME Prime lending rates and is also offering payment holidays for asset-backed or business loans for up to 6 months.
- The RAKstarter current account offered at a zero balance is offered to new entrepreneurs and fresh start-ups.
- Simplify the platform of the bank is to waive off the monthly fee for 3 months to the businesses offering essential services such as groceries and medicines.
Sharjah Islamic Bank
- Any retail client that has failed to receive their salary or has been made redundant due to the current scenario of the economy can apply for loan installment deferment for 3 months at no charges.
- Real estate loan payments can be deferred for a month.
- The bank increased the withdrawal limit per day to reduce the need for one to visit the branches. The limit is AED 15,000 for individuals and AED 25,000 for any priority clients.
- Reduction in the minimum account balance to AED 10,000.
- The corporate clients can get in touch with their relationship manager to discuss options available for them that can help in reducing the impact of COVID-19 on their businesses.