Regulatory Alerts2020-01-08
A circular dated January 8, 2020 regarding the initiative for irregular legal persons operating in the tourism sector
The Central Bank of Egypt (CBE) has issued a resolution requiring banks to disclose all information related to any overdue facilities provided by them to the client and managed under the SME Credit Guarantee Scheme or the Egyptian Credit Guarantee Company. This is in compliance with the provisions of Law No. 136 of 2019 on Credit Guarantees for Small and Medium Enterprises (SMEs). The resolution includes the following main points: - Banks must disclose the full details of any facilities granted to an SME, managed under the SME Credit Guarantee Scheme or the Egyptian Credit Guarantee Company. This information should include all collateral pledged by the client. - Any existing restrictions on dealing with such a facility are to be removed for a period of two years from the date that 50% of the amount is overdue, provided this information is treated as historical data only. - All outstanding legal and litigation cases involving the customer should be settled immediately upon agreement by the bank concerned with the relevant banks for rescheduling of payments. - All specific guarantees relating to such facilities must be released. - The value of any write-off from the facility should be determined by the bank in accordance with its internal risk assessment procedure. - All specific guarantees relating to the same must also be released. - The value of any write-off from the facility should be determined by the bank in accordance with its internal risk assessment procedure. The resolution also requires banks to carry out a credit guarantee study for their clients, and to rely on project financing as a source of repaying the loan, instead of personal guarantees or collateral provided by customers including surety bonds. It also requests banks to take all necessary measures to implement these resolutions, and take into account the relevant legal provisions and procedures.