The Executive Chairman of Sharjah Islamic Bank, Mohammed Abdullah, revealed that the Central Bank is currently considering extending the period of postponement of loan installments due on small and medium projects, six months or more.
In a seminar on a distance organized by the "Emirates Entrepreneurs Association" on the banking sector in light of the "Covid-19" pandemic, he stressed that "the central" set criteria for postponing loans and setting penalties and fines for banks that prove their refusal to postpone loan installments.
In turn, the participants in the symposium reviewed the reality of small enterprises and the challenges they are currently facing, expecting that small national companies will recover from the pandemic faster than other companies.
Deferment of installments
In detail, the Executive Chairman of the Sharjah Islamic Bank, Mohamed Abdullah, said that the Central Bank is currently considering extending the period of postponing the loan installments due on small and medium projects, by six months or more.
He added in a seminar on a distance organized by the "Emirates Entrepreneur Association" on the banking sector in light of the "Covid-19" pandemic, that business leaders should be reassured that banks will not request the installments due for several months to come, pointing out that officials in the state and the central bank Knowing the challenges facing many sectors, such as tourism, which needs approximately six months to recover from the repercussions of the "Covid 19" pandemic.
In response to complaints from citizens of business leaders about banks ’refusal to postpone loan installments for their projects, Abdullah explained that the“ central ”set criteria for postponing loans, and put penalties and fines on banks that prove their refusal to postpone loan installments, at a time when banks formed several committees to accelerate the postponement processes.
Support proposals
Abdullah pointed out that there are no departments in banks to deal with small and medium citizenship projects, expecting the existence of such departments in the future.
Abdullah, who is also the vice president of the Sharjah Foundation for Supporting Entrepreneurial Projects, called “Rowad” to establish a fund to finance small national projects in which banks contribute, and establish a government body to follow up on the implementation of government initiatives for entrepreneurs, especially allocating 10% of purchases to citizens ’entrepreneurs. And make sure of their application, pointing out that citizen entrepreneurs suffer from not winning bids without knowing the reason.
Lower fees
On his part, Suhail bin Tarraf Al Mansoori, CEO of Emirates Islamic Bank operations, revealed that banks are currently considering reducing service fees for small projects, stressing that relying on technology and computing reduces fees.
He pointed to the interest of banks in digital transformation, and expected that the coming period would witness the launch of full digital banks to deal with small projects.
Al-Mansouri also expected small national companies to recover from the pandemic faster than other companies.
He explained that the current period witnessed an increase in the number of complaints from banks, despite the very difficult conditions in which these banks operate as a result of the precautionary measures imposed by the pandemic of "Covid-19".
Al-Mansouri called for increasing the banks ’support to the tourism sector, which includes restaurants, hotels and car rental offices, to quickly restart it.
Continuous financing
In the same vein, Mahdi Kilani, head of the Business Banking Services Group at Abu Dhabi Islamic Bank, said that bank financing for small projects is still continuing and has not stopped during the pandemic, stressing that the banks intend to increase the funds during the coming period, as an economic activity boom is expected, requiring new funds after The crisis is over.
He explained that the banks agree to the request to postpone the installments of small national companies, pointing out that the owner of the project can resort to the committee formed by the “Central” to protect the consumer in the event of problems in the delay.
He stressed that the companies' exposure to the banking sector is greater than the exposure of the small projects sector, which is described as a high-risk sector, given that companies have a much larger proportion of financing than small projects, pointing out that bank financing for the small projects sector increased from 3% to 8% during five years.
Revenue and earnings
As for the Chairman of the Board of Directors of the Emirati Entrepreneur Association, Sanad Al-Maqbali, he said in the opening speech of the symposium that some small companies that obtained loans with high interest before the crisis are currently suffering in light of the declining profits, pointing out that the decline in the returns of some companies negatively affected the ability to pay the value of monthly installment.
Al-Maqbali asserted that there is a response from banks in terms of postponing installments, but that there are still challenges in some sectors, with banks stipulating previous interest payments before postponing installments, which is a burden on entrepreneurs.
Al-Muqbali pointed out the different evaluation requirements from one bank to another, stressing the society’s interest in communicating with banks to present the challenges facing entrepreneurs, calling for the necessity of facilitating lending procedures for startups if their income is good and their idea is good, and it provides new innovative project ideas.
Banking facilities
The head of national projects finance and real estate financing for companies in the National Bank of Ras Al-Khaimah, Imad Musleh Ahmed, confirmed that banks recently began looking at new financing requests from small national projects, in cooperation with the Emirates Development Bank, pointing out that there is a focus on the sectors stipulated in « Vision 2021 ».
He also referred to banks that facilitated communication with customers by allowing the entrepreneur to open the company's online account for free, and the services provided online increased.
Rahoomi: Challenges beyond control
First Deputy Chairman of the Federal National Council, Hamad Al-Rahoumi, said that there is no alternative to banks' support for small national projects, pointing out that the challenges that these projects face are not related to mismanagement but rather circumstances completely outside their control.
He added that the problems of national companies are few compared to other companies, and they remain for decades.
Rahoumi revealed that the National Council received calls from owners of small projects that banks refused to postpone their financing installments, pointing out that banks' support for projects enables them to collect their money instead of the financial stumbling that these projects may face.