TESS Liquidity Scheme benefits 26 Banks: Central Bank at UAE

According to surveys, more than 140,000 customers have benefitted from the Liquidity facilities. As an aftermath of the COVID-19 pandemic, more than 26 Banks have benefited from the TESS (Targeted Economic Support Scheme) facility. In the sixth meeting of the Central Bank of the UAE (CBUAE), the board assessed the utilization of the scheme. The deferrals were given to eligible clients and customers by banks and the progress of the liquidity facility.

Currently, banks based in UAE have availed about eighty-eight percent of the Dhs50bn liquidity facility. This is equivalent to the allocated funds which are Dhs44bn.

Moreover, estimates have suggested that more than 140,000 clients have enjoyed from the liquidity TESS facility. These positive results suggest this scheme has turned out to be a relief for the country.

On the 15th of March, the Central Bank Of UAE (CBUAE) announced a new stimulus package; Dhs100bn. This package included Dhs50bn which was based on the zero interest policy, meaning exclusive of any interest. Furthermore, banks’ capital buffers were freed up. This is because of Dhs50bn funds and the package included loans that were collateralized for banks based in the UAE.

Not only did the Central Bank of the UAE (CBUAE) do this, but they also issued further directives on the 5th of April. These directives offered measures of relief to banks, individuals, and corporates within the UAE. The organization decided to decrease the reserves requirements by half for all banks for demand deposits from fourteen percent to seven percent. This was done in order to inject liquidity of Dhs61bn. This can be used as a support mechanism for banks that help in the liquidity management of UAE and lend to its economy.

Moving on, the board of Central Bank of the UAE (CBUAE) reviewed all details of the support that was given to customers outside the TESS liquidity facility. It concluded that more than 180,000 clients had benefitted from this support, with a total of Dhs8bn of deferral value.

Furthermore, they also reviewed reports on the macro-financial developments. The financial system surveillance and resilience of the banking sector of UAE were reviewed as well.

The Central Bank of the UAE has concluded that the country’s economic activity will start to steadily recover in the second half of this year. Despite the harsh economic changes that occurred due to the global pandemic, the liquidity facility developed by CBUAE will help in maintaining the state of banks and customers.