Regulatory Alerts2017-04-03
A circular dated April 3, 2017 regarding the mechanism for compensating the return price difference for the tourism, companies, and medium-sized enterprises initiative.
The Governor of the Bank of Alexandria, Dr. Hisham Okasha, emphasized that banks should focus on small and medium enterprises (SMEs) through their loans by paying a simple net interest rate. This involves using excess reserves to grant short-term working capital loans at an interest rate of 12%, which can be used for providing working capital financing for SMEs operating in the industrial, manufacturing, agricultural, renewable energy, and modern sectors only, with special care given to exporting or importing companies. The Governor also said that banks should offset their loan portfolio by reducing their excess reserves using a simplified net interest rate, which includes the highest margin for deposits (currently 8%). He added that compliance with regulations is critical and the data provided must be accurate according to central bank requirements. In addition, he urged the acceptance of "high esteem" for the country's banking sector.