CBUAE Offers Loan Repayment Deferment to Storm Victims

In response to the recent record-breaking storms in the Emirates, the UAE Central Bank has issued a notice allowing banks and finance companies to offer a six-month repayment deferment for personal and car loans. This measure aims to provide relief to customers affected by the severe weather events.

According to the Central Bank’s announcement on Monday, the deferral will not incur additional fees, interest, or profit charges, nor will it increase the principal amount of the loan. The regulator also confirmed that comprehensive insurance policies would cover damage to vehicles and homes caused by the storms.

“The insurance companies shall be considered responsible for indemnification,” the Central Bank stated, emphasising that homeowners with appropriate insurance coverage are entitled to repairs for damages caused by the extreme weather conditions.

To ensure consumers understand their rights, the Central Bank urged them to read their insurance policies carefully. In cases of disputes with insurance companies, the Central Bank recommended that customers approach Sanadak, the financial and insurance ombudsman. Launched last month, Sanadak aims to reduce the legal burden on consumers by resolving disputes without court intervention.

The recent storms caused significant disruptions across the UAE, with heavy rainfall leading to flooded homes and roads, abandoned cars on motorways, and flight cancellations. The National Centre of Meteorology reported that one area in Al Ain experienced 254mm of rain within a 24-hour period, equivalent to about two years’ worth of average rainfall in the UAE.This exceptional weather event has prompted the Central Bank to extend support to those affected by offering loan repayment deferments and emphasising insurance coverage. During the coronavirus pandemic, the Central Bank implemented similar measures through the Targeted Economic Support Scheme, which included Dh50 billion ($13.6 billion) from Central Bank funds through collateralised loans at zero cost to banks operating in the UAE, along with an additional Dh50 billion in funds freed up from banks’ capital buffers.

These latest steps by the Central Bank aim to mitigate the financial impact on individuals and support the resilience of the UAE’s economy in the wake of unprecedented storms.