Central Bank of Egypt Decision No. 2408/2008 on Encouraging Banks to Finance Small and Medium-Sized Enterprises

Mr. Professor / Bank Greetings,

In light of the importance of the role of the domestic banking sector in supporting the national economy and developing and activating various enterprises and establishments, especially small and medium-sized enterprises that do not easily receive banking financing and still face difficulties in obtaining financing. A decision was issued by the Board of Directors of the Central Bank of Egypt No. 2008/2408 at its meeting held on December 16, 2008 (attached image) regarding encouraging banks to finance small and medium-sized enterprises and establishments.

I kindly request taking the necessary action to implement the aforementioned decision, and the Supervision and Inspection Department of the Central Bank will provide you with the decisions specifying the detailed conditions, procedures, and rules for applying the provisions of the first and second articles of the aforementioned decision.

Please accept my highest respect,

Gamal Naguib Board
Email: Secretary_board@cbe.org.eg

Issuance No.: 24 / 2 Q.B. 2008/24 Date: 2008/12/16

Decision of the Board of Directors of the Central Bank of Egypt No. 2408 / 2008 At its meeting held on December 16, 2008 Regarding encouraging banks to finance small and medium-sized enterprises and establishments

After reviewing the Central Bank of Egypt Law, the Monetary and Banking Law issued by Law No. 88 of 2003 and its executive regulations,

And based on the approval of the Board of Directors of the Central Bank of Egypt at its meeting held on December 16, 2008, it has decided:

( Article One )

Banks that grant loans and credit facilities to small and medium-sized enterprises and establishments are exempted from the reserve ratio of 14%, to the extent of what is granted to them starting from January 1, 2009, to encourage banks to grant credit to these enterprises and establishments.

( Article Two )

In applying the provisions of this decision, enterprises and establishments are considered small or medium-sized, and its provisions apply to the financing granted to them, provided that the following two conditions are met:

1. Their annual business volume or sales do not be less than one million Egyptian pounds and do not exceed twenty million Egyptian pounds.
2. Their paid-up capital does not be less than two hundred and fifty thousand Egyptian pounds, and does not exceed five million Egyptian pounds.

( Article Three )

The Supervision and Inspection Department of the Central Bank of Egypt shall issue the decisions specifying the detailed conditions, procedures, and rules for applying the provisions of the two preceding articles.

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Address: 31 Qasr St - - : - Tel. Office: - -

Board
Email: Secretary_board@cbe.org.eg

Issuance No.: 24 / 2 Q.B. 2008/24 Date: 2008/12/16

( Article Four )

A specialized unit is established at the Egyptian Banking Institute to serve banks in the fields of preparing studies, human resources, technical and technological capabilities necessary to establish specialized departments in financing and providing banking services to small and medium-sized enterprises and establishments.

( Article Five )

Coordination with relevant authorities to put in place policies capable of qualifying small and medium-sized enterprises to obtain financing and banking services from banks, without conflicting with sound financing rules, and specifically how to prepare the necessary documents and comply with accounting, auditing, and transparency standards.

( Article Six )

Coordination with relevant authorities to develop the infrastructure for the financing and banking services activity for small and medium-sized enterprises, including activating the activity and services of credit reporting agencies, credit rating agencies, guarantee and insurance companies, and payment systems in a manner that contributes to improving the ability of small and medium-sized enterprises to obtain financing.

Coordination with the competent authorities to study and propose necessary legislative amendments and executive procedures to limit the credit risks associated with small and medium-sized enterprises, thereby facilitating their access to financing.

( Article Seven )

This decision shall be published in the Egyptian Gazette, and it shall be implemented starting from January 1, 2009.

The Governor

Dr. Farouk Al-Aqda

Address: 31 Qasr St - - : - Tel. Office: - -