Funds collected by UAE’s direct debit system reach Dhs61 billion

Value of funds collected through the UAE Direct Debit system (UAEDDS) of the Central Bank of the UAE (CBUAE) rose by 7 per cent to Dhs61 billion in 2019 from Dhs57 billion in 2018, according to figures released by the Central Bank of the UAE.

The statistics noted the increase in the funds settled through the UAE Direct Debit system was matched with a similar surge in executed transactions from 13.4 million in 2018 to 16 million at the end of 2019.

The objective of introducing the UAEDDS by the CBUAE is to provide the customers with an automated payment method that will facilitate recurrent payments from their bank accounts to pay, for example, utility bills (telephone, electricity and water), insurance premiums, and to service and repay credit cards, finances and loans payments.

The apex bank launched the system eight years ago in implementation of the Federal Government’s strategy to adopt advanced technological payment systems in an effort to improve bank customers’ services.

Meanwhile the UAE Government’s efforts to provide financial aid and other social benefits to citizens intensified in 2019.

These efforts were highlighted by the rise in aid in 2019, reaching Dhs7.46 billion, an increase of 2 per cent compared to Dhs7.32 billion in 2018.

Financial aid and social benefits accounted for 13.4 per cent of total federal government expenditures in 2019, as per statistics from the Ministry of Finance, reflecting the government’s efforts to promote community coherence, which is one of the key indexes of UAE Vision 2021. This index measures the community’s overall sense of national identity, as well as the level of social solidarity among individuals.

The Ministry of Finance’s statistics also showed that the value of financial aid provided by the federal government to Emirati citizens in 2019 totalled some Dhs2.88 billion, while social benefits accounted for approximately Dhs4.58 billion.

Government aid included support provided through the Ministry of Community Development, in addition to pricing restrictions, direct cash support to those eligible, and aid provided to people of determination and senior citizens, as well as social care, marriage grants and other services.

The value of financial facilities provided to non-profit organisations and the services sector in the UAE in the first quarter of 2020 amounted to Dhs5.8 billion, according to statistics issued by the Central Bank of the UAE (CBUAE).

Non-profit organisations serve the entire community but making profits is not their main objective, CBUAE said, adding that it is to help to reinforce community coherence and is a key pillar of the UAE Vision 2021.  Non-profit organisations include charity associations, sports and cultural clubs, theatres, public libraries, women’s, children’s and family affairs associations, and other charitable organisations serving the community.

In detail, the pace of financial support for non-profit organisations and the services sector in the country has accelerated, amounting to Dhs149 billion at the end of March 2020 compared to Dhs143.2 billion in December 2019, which accounts for some 9.3 per cent of the total support provided by the UAE’s banking sector valued at Dhs1.6 trillion, according to statistics from CBUAE.

The support provided to non-profit organisations is expected to increase in 2020, in line with their expanding community role, especially in family support, the Bank added.

Meanwhile effective from yesterday (July 12) the Central Bank of the UAE (CBUAE), introduced a new deposit facility named Overnight Deposit Facility (ODF), which will enable conventional banks operating in the UAE to deposit their surplus liquidity at CBUAE on an overnight basis.

“The introduction of the ODF is the first step towards implementation of the new Dirham Monetary Framework announced earlier this year,” the UAE Central Bank said in a statement.

It added, “The new deposit facility shall be the prime facility for managing surplus liquidity in the UAE banking sector prior to the launch of the Monetary Bills Programme and shall replace issuance of one-week Certificate of Deposits.

“With the introduction of ODF, the general stance of the CBUAE’s monetary policy will be signaled through the interest rate of the ODF, which becomes the main policy rate of the CBUAE and will be referred to as the Base Rate. Accordingly, the CBUAE expects that overnight money market rates should hover around the Base Rate under normal markets conditions.

“The Base Rate, which will be anchored to the US Federal Reserve’s Interest on Excess Reserves, should also provide the effective interest rate floor for overnight money market rates.”

The CBUAE said it will also be providing a variant facility of the ODF to cater for licensed financial institutions that carry on all or part of their activities and business in accordance with the provisions of Shariah rules.

“Until this facility becomes operational, the CBUAE will continue to offer to these institutions the one-week commodity Murabaha-based Islamic Certificate of Deposits, which will be breakable on daily basis,” CBUAE explained.

Commenting on the launch of the ODF, Abdulhamid Saeed, Governor of CBUAE, said, “The introduction of this new facility is a reflection of the CBUAE’s continuous efforts to achieve the objectives of its monetary policy and to foster money market developments in the UAE.

WAM