On 4 April 2020, the UAE Central Bank rolled out a stimulus package amounting to approximately AED 256 billion meant to assist lenders in alleviating financial pressure on their customers. It had previously launched AED 100 billion worth of measures. Most of the aforesaid measures are meant to ease financial and liquidity requirements for the banks. Among other things, the UAE Central Bank halved the bank’s capital requirements from 14% to 7%.
This comes into play as drastic containment measures have been taken in UAE – such as stay-at-home directives and passenger flights stoppage – that could lead to massive decline in revenues for businesses and income cuts/job losses for individuals.
This newsletter will set out the current main relief actions undertaken by participating UAE banks as well as a variety of free zones. It should be noted that the duration of measures is subject to regular changes and should be monitored separately for accuracy.
1. CREDIT AND BANKING SERVICES
Dubai Islamic Bank, Emirates Islamic, Mashreq, Emirates NBD and Commercial Bank of Dubai
- One (1) month repayment holiday with zero fees for customers who have availed personal finance, auto finance, or mortgage.
- Up to three (3) deferred monthly installments without fees and profit charges for financially impacted customers (due to unpaid leave or other valid reasons).
- 50% reduction in cash advance charges for customers using credit cards for cash withdrawals.
- Refund of charges on debit card cash withdrawals on the ATM of other banks.
- 0% easy payment plan on school fee transactions and grocery purchases with zero processing fees for credit cardholders.
- Refund on foreign currency charges related to travel and hotel cancellations.
- 5% increase in the loan-to-value ratio (up to 80% for expatriates and up to 85% for UAE nationals)and a full waiver of processing fees for first-home buyers.
- Up to three (3) month repayment holiday with zero interest and fees for small business customers holding merchant loans, equipment loans or business vehicle loans.
- Monthly minimum balance required for a basic business banking account reduced to AED10,000 and minimum balance charges waived for a period of three (3) months.
FAB, ADCB and ADIB
For individuals impacted by COVID-19:
- Deferral of installments on existing loans (personal, auto and mortgage)and credit cards for up to three (3) months with no additional fee until 30 June 2020.
- Foreclosures on mortgages for defaulted customers halted until 30 June 2020.
- Suspensions on bank accounts for retrenched customers halted until 30 September 2020.
- Refund of foreign currency transactions made after 1 January 2020, associated with cancelled travel plans.
- No-fee installment plans for utility bills until 30 June 2020.
- Deferral of installments on existing loans (personal, auto and mortgage) and credit cards for up to 3 months with 50% reduction on additional fee until 30 June 2020.
- Reduced interest charges for new loans (personal, auto and mortgage) and credit cards.
- Bank charges on early settlement of existing loans (personal, auto and mortgage) reduced by 50% until 30 June 2020.
- Reduction on down-payment of 5% for first-time home buyers.
- Interest-free installments plan for school fee with waiver of service charges or 0% interest loan until 30 June 2020.
For businesses impacted by COVID-19:
- Deferral of installments on existing borrowings for up to three (3) months with 50% reduction on additional fee until 30 June 2020.
- Reduction of merchant service fees (credit card transactions)by 50% for SME’s with usage below AED 5,000,000 per annum until 30 June 2020.
- Banking fees and charges on zero balance accounts reduced by up to 50%.
- Reduction of minimum average balance requirement for all SME’s account categories to up to AED 10,000 per month.
- Deferral of installments on new borrowings for up to three (3) months with 50% reduction on additional fee until 30 June 2020.
- Reduction of interest charges on new borrowings based on new prevailing interest rates.
- Bank charges on early settlement of existing borrowings reduced by 50% until 30 June 2020.
- Three (3) month payment deferral on loans (car and personal).
- One (1) month payment deferral on credit card payments.
- One (1) time discount of up to 50% on overdue transaction fees.
- Possibility to convert education and electronic spending on credit cards into an easy installment plan at 0% interest and zero processing fees for up to 24 months.
- Reduction for lending rate and payment holiday for business loans or asset-backed loans for a period of up to six months.
- Offer of a starter zero balance current account to start-ups and new entrepreneurs.
- Waiver of monthly fees over the next three months to businesses that offer essential services, such as medicines and groceries.
Sharjah Islamic Bank
- Deferral of installments for up to three (3) months at no charge for any customer impacted by COVID-19 (made redundant or failed to receive their salary).
- Deferral of payments on real estate loans for one month.
- Daily withdrawal limit from ATMs increased to AED 15,000 for individual customers and AED 25,000 for priority banking customers.
Minimum account balance reduced to AED 10,000.
2. COMPANY REGISTRATION, LICENSING AND ADMINISTRATIVE FEES
Reduction of 50%-70% in business-related fees for registration, licensing and administrative related charges.
- 100% waiver of the office sharing permit fee.
- 100% waiver of the company reinstatement fees.
- 30% discount on license renewal.
- 80% reduction on the total company set up fee if shareholders are residents of JLT.
- Up to 50% reduction on the total company set up fee, along with a flexi desk for 1 year.
- 10% discount of renewal of license fees.
- Waiver of annual licensing fees.
- 50% waiver on fees associated with the incorporation of new ADGM companies and limited liability partnerships (including branches).
- 100% waiver on continuation fees for companies continuing into ADGM from a foreign jurisdiction.
- 100% waiver on license renewal fees (commercial license, business activities and data protection).
- 50% refund on annual supervision fees already paid for 2020.
- 50% waiver on annual supervision fees to be paid until end of 2020.
- 100% refund on annual funds fees already paid for 2020.
- Waiver on annual funds fees to be paid until end of 2020.
- Waiver on new temporary work permits issuance, renewal and late application fees.
- 50% waiver on agent registration fee.
- 50% waiver on new incorporation fee.
- 25% on discount premium packages.
3. COMPANY TENANCY AND REAL PROPERTY
- Waiver of outdoor area rents for JLT retailers with existing contracts, where DMCC is the building owner/landlord.
- Waiver of rent for two (2) months for commercial establishments impacted by the latest Dubai Economy directive requiring a temporary closure, where DMCC is the building owner/landlord.
- A three (3) month holiday for flexi desk and DMCC Business Centre tenancy renewals or monthly/quarterly installment with no discount.
- Flexible payment options for new DMCC business center tenants.
- Up to six (6) month holiday for rent payments in respect of all properties owned by DIFC Investments;
- Reduction on property transfer fees from 5% to 4% for any sale of property (or any part thereof)if that took place within the three (3) month period and if the transfer is registered with the DIFC Registrar of Properties, at the latest, within 30 days after the expiry of the said three-month period.
4. COMPANY PENALTY FEES
- 100% waiver for late license renewal penalties.
- 100% waiver for all flexi desk and DMCC business center penalties until the end of 2020.
Facilitation of free movement of labor between DIFC and other free zones.
Existing ADGM companies and limited liability partnerships are now able to request an extension on the nine-month timeline for filing of annual accounts by demonstrating circumstances hindering their ability to comply with such obligation.