How do Banks in UAE help those who are affected by Pandemic?

With the current distress due to the coronavirus pandemic, we all seem to be living in a world, which was totally unknown for us a few months back. We have been affected by in one way or another but the reality has been harsher for the ones who have gone through job losses and pay cuts.

The people who earn an unpredictable variable income stream have suffered the biggest blow amongst all. Also, the people working in sectors such as hospitality and aviation have been affected more as opposed to those working in essential goods or FMCG sectors.

Since the pandemic and the steps for containing it have led to economic ramifications throughout the world, the regulators and banks have come forward for offering financial relief to retail customers as well as businesses.

Under the AED 100 billion fiscal stimulus package introduced by the UAE Central bank earlier this year in the wake of the pandemic, the lenders in the Emirates were asked to be fair with all the customers and offer temporary relief to the loan payments of retail clients for the next few months.

The Targeted Economic Support Programme involves AED 50 billion from the funds of the central bank through secured loans at zero cost to the banks functioning in the UAE and AED 50 billion of the funds freed from the capital buffers of the banks.

Emirates NBD, the largest bank in terms of assets in the Emirate of Dubai along with the largest Sharia-compliant loan provider in the UAE- Dubai Islamic Bank, Mashreq, Emirates Islamic, and CBD (Commercial Bank of Dubai) had announced various supportive measures, which remained effective for the next few months of the announcement.

In the Emirate of Abu Dhabi, FAB (First Abu Dhabi Bank), ADIB (Abu Dhabi Islamic Bank), and ADCB (Abu Dhabi Commercial Bank) are providing supportive measures to their customers. These 3 banks have started 17 initiatives for supporting businesses and individuals.

Other than these, the RAKBank, CBI (Commercial Bank International), and Sharjah Islamic Bank have also promised to help their customers.

Here is an outline of how these banks have offered help to the customers as well as businesses during the time of this crisis.

Emirates NBD, Commercial Bank of Dubai, Mashreq, Emirates Islamic, and Dubai Islamic Bank

Individual Customers-

1. The customers for retail loans who have been placed on unpaid leaves can request their bank to provide them with a payment holiday for a maximum of 3 months with no interest & fees.
2. The customers having mortgages, personal loan and car loans EMI can apply for a repayment holiday of a month without any fees.
3. Those who have bought a home for the first time can have the benefits of a 5% rise in the loan-to-value ratio (a maximum of 80% for the expats and 85% of the UAE Nationals), and a complete waiver of the processing charges.
4. The charges on cash withdrawals through debit cards from the other banks’ ATMs throughout the UAE will get refunded.
5. The customers of credit card take benefit from no-interest installment plans for the payment of school fees and grocery shopping without processing fees for a maximum of 6 months.
6. Those who have to cancel their travel bookings, which were made using their credit as well as debit cards, get a refund of the international currency transaction charges that are levied by the concerned bank.
7. The charges on cash advance for those customers who use credit cards for the purpose of cash withdrawals will be half of the original.

Business Customers-

1. The small businesses that hold merchant loans, business vehicle loans, or equipment loans are able to apply for a repayment holiday of 3 months without any fees and interest.
2. The minimum monthly balance needed for a simple business banking account gets reduced to AED 10,000 and the minimum balance fees will get waived off for a duration of 3 months.

Abu Dhabi Islamic Bank, Abu Dhabi Commercial Bank, and First Abu Dhabi Bank

Individual Customers-

There are some benefits especially for those affected by the coronavirus and some for all.

For everyone:

1. A 3-month payment holiday is applicable to new credit cards and loans with a reduction of 50% on charges.
2. There will be a reduction of interest charges on new loans.
3. The bank fees charged for the early settlement of existing loans is reduced to half.
4. In the case of banks in the Emirate of Dubai, the requirement of down-payment for those who buy first-time is decreased by 5%.
5. The installment plans without interest for the payments of school fees are available.

For those affected:

1. A 3-month payment holiday is applicable to new credit cards and loans without any additional costs.
2. Freezing of bank accounts is stopped for those customers who had their income or salary reduced or made redundant.
3. International currency transactions that are done post January 1 that are related to cancelled travel plans will get refunded.
4. The payment of utility bills can be done in no-fees installment policies. 

Business Customers-

There are various initiatives for business customers also, some for those who are impacted by the pandemic and some for everybody.

For everyone:

1. A 3-month payment holiday is applicable to new borrowings with a reduction of 50% on charges.
2. The interest rate charged on new borrowings will get reduced.
3. The bank fees charged for the early settlement of existing loans is reduced to half.

For those affected:

1. A loan payment deferment for a maximum of 3 months will be applicable to the existing borrowings.
2. The service charges of the bank merchant will be reduced to half for those SME customers that are eligible with annual transactions on credit card below AED 5 million.
3. The bank charges will get reduced by a maximum of 50% for a zero balance account.
4. As per the guidelines of the central bank, the minimum balance for every SME accounts has been decreased to AED 10,000 monthly.

Sharjah Islamic Bank

Individual Customers-

Any of the retail customers who have failed to get their salary because of the present economic situation or have been made redundant can request for deferring installments for 3 months without any charge. The deferment option for the payment of real estate loans is for a month.

For eliminating or reducing the need for visiting the branches, the daily limit for withdrawal from ATMs was increased by the bank to AED 15,000 for individual customers and AED 25,000 for the priority banking customers.

Business Customers-

The bank has decreased the minimum account balance to AED 10,000. It allows the corporate customers to reach their relationship managers for discussing the options available to them for helping them in mitigating the effect of the COVID-19 pandemic on their business. 

RAKBANK

The RAKBANK announced various measures for supporting SMEs, individuals, and corporates, which are impacted by the pandemic saying that they will look at the needs of their customers on a case-by-case basis like making payment of illness or disruption from the coronavirus.

Individual Customers-

A payment holiday of 3-months is available on car and personal loan EMI and a 1-month holiday on the payments of the credit card. This bank has offered a one-time off up to 50% on the overdue transaction charges. The customers can convert electronic and education spending on the credit cards into EPP or Easy Payment Plans at a 0% rate of interest and no processing fees for a maximum of 24 months.

The banks and lenders in the UAE have recognized the need for protecting their customers in these difficult times and are committed to giving them a helping hand at the time of need.