Emirates Development Bank has signed a preliminary agreement with Dubai Islamic Bank to offer a credit guarantee for small and medium enterprises in the UAE's priority sectors.
As a part of the deal, DIB will offer up to Dh10 million ($2.7m) to SMEs, with half of it being guaranteed by EDB, the lenders said on Wednesday.
DIB, the largest Sharia-compliant lender in the Emirates, will aim to disburse Dh200m, with a focus on UAE citizens and priority sectors under this initiative.
The two banks will step up lending to the SME segment in sectors such as manufacturing, health care, infrastructure, food security and technology, helping them have easier access to finance.
“Emirates Development Bank is committed to supporting the UAE’s economic diversification strategy. To achieve this, one of the pivotal steps is to bridge the funding gap for SMEs, particularly those operating in priority economic sectors,” said EDB chief executive Ahmed Al Naqbi.
EDB aims to provide Dh30 billion ($8.17bn) in financing over the next five years as part of a strategy to support SMEs and the country's industrial sector.
The UAE plans to more than double the size of its industrial sector to Dh300bn by 2031.
Last year, EDB signed similar agreements with other banks in the UAE, including Emirates NBD, RAKBank, the Commercial Bank of Dubai, the National Bank of Umm Al Quwain and the National Bank of Fujairah.
Wednesday’s agreement reinforces the continuing commitment by both lenders to support the SME ecosystem and increase their contribution to the country’s gross domestic product by offering strategic financing solutions, they said.
The move is in line with EDB’s strategy to offer direct and indirect lending for SMEs, as well as business advisory services for entrepreneurs, start-ups and small companies.
“Cultivating strong and trusted relationships and identifying opportunities to grow the SME ecosystem has seen us contribute to the ongoing success and wealth of the nation,” said Adnan Chilwan, group chief executive of DIB.
EDB was founded in 2011 through a merger between Emirates Industrial Bank and Real Estate Bank. It will fund industries such as health care, infrastructure, food security and technology, and help to generate 25,000 jobs.
