Banks in Dubai will offer their customers and clients loan repayment holidays and reduced charges to help soften the impact of the coronavirus outbreak on their finances and relieve economic pressure.
The pandemic is hammering the global economy, disrupting trade and has brought the travel and tourism sector almost to a grinding halt.
Emirates NBD, the biggest bank by assets in Dubai along with UAE’s largest Sharia-compliant lender Dubai Islamic Bank, Emirates Islamic, Mashreq, and Commercial Bank of Dubai have announced a series of support measures that will remain in effect for three months starting April 1, the Dubai government media office said on Saturday.
The measures support the plans that have already been put in place by the UAE government to "keep the UAE safe and prosperous", Emirates NBD chairman, Sheikh Ahmed bin Saeed, said. "We recognise the need to protect those most vulnerable and are committed to lending a helping hand during this uncertain time."
The measures follow the Central Bank of the UAE's Dh100 billion stimulus unveiled earlier this month, and separate packages from the Abu Dhabi and Dubai government that entail reduced or exempted fees for a range of services. The UAE, the second-biggest Arab economy, joined governments and central banks around the world in announcing emergency economic packages and safety measures, to contain the spread of the coronavirus and soften the impact on their economies.
The virus, which has its roots in the Chinese city of Wuhan, has infected more than 278,000 people and at least 11,570 have died, according to a tally by Johns Hopkins University. Italy, Spain and Iran are among the worst hit countries outside of China, as nations across Europe, Middle East and North America close borders and implement travel restrictions.
The relief measures from conventional banks including Emirates NBD, Mashreq and Commercial Bank of Dubai extend to the lenders’ retail, business and small and medium-sized enterprises clientele.
Retail loan customers placed on unpaid leave by their employers can approach the banks for repayment holidays of up to three months with zero interest and fees. Those who have taken out personal loans, auto loans or mortgages can apply for a one-month repayment holiday with no fees.
For mortgage clients, the banks are offering all first time homebuyers a 5 per cent increase in the Loan-to-Value ratio (LTV) and full waiver of processing fees. Customers will also be able to get a refund of charges on cash withdrawals using debit cards on ATMs of other banks across the UAE.
Credit card customers will be allowed interest-free installment plans for all school fee payments as well as grocery purchases with no processing fees for up to six months.
Customers who cancel their travel bookings done through credit and debit cards will receive refund of the foreign currency transaction fees already charged by the bank. Customers using credit cards for cash withdrawals will have to pay half cash advance charges.
"We fully recognise the importance of assisting our customers, businesses and communities in these challenging times through these relief measures and we place the highest priority on ensuring the welfare and happiness of the society and all those living in the country," said Abdul Al Ghurair, chairman of Mashreq Bank.
Dubai lenders are also offering their SME clients, who have availed merchant, equipment or business vehicle loans, an option to apply for a repayment holiday of three months with zero interest and fees.
The lenders have also reduced the monthly minimum balance required for basic business banking account to Dh10,000 and have waived the minimum balance charges for three months.
For wholesale banking, lenders are prioritising relief measures for key industry sectors contributing to the UAE economy that have been most affected in the current situation, including health care, aviation, hospitality, retail, event management, consumer goods and education, by offering refinancing, repayment deferrals or lower repayments where required, it added.
“In accordance with this announcement, banks will show more flexibility to stressed customers during this difficult time and support its retail, SME and corporate customers through several specific initiatives targeted at reducing their financial burdens,” Mr Al Ghurair said.
Reduced bank charges for digital trade transactions all trade finance customers and enhanced credit and trade lines are also on offer. Customers trading in the UAE stock markets have also been offered “suitable instalment payment plans” against additional collateral to help them regularise their margin trading positions, the Dubai government said.
Dubai Islamic Bank and Emirates Islamic are providing most of the retail banking facilities offered by their conventional banking peers to their customers.
The two Sharia-compliant lenders are also offering financially impacted customers option to apply for debt consolidation solutions where appropriate. The lenders will also work with the customers facing margin calls on their shares portfolio.
The lenders have asked their business, wholesale and priority banking customers to contact their relationship managers to find the best solutions to ease their financial burden during the crisis.
“In these unprecedented times, strong and decisive actions are critical to sustain the economy,” said Mohammed Al Shaibani, director general of the Ruler’s Court of Dubai and chairman of DIB .
The bank has taken steps to “ensure both physical and financial health and security of our entire client base”, he added.
The move by Dubai lenders follow announcements earlier this week by First Abu Dhabi Bank, Abu Dhabi Commercial Bank and Abu Dhabi Islamic Bank, offering a number of similar support measures to their customers.