Circular dated January 18, 2024 regarding the extension of mandatory credit portfolio ratios for SMEs

Cairo on: January 18, 2024

Dear Sir, Chairman of the Board of Directors,

Greetings,

With reference to the Circular Letter dated February 22, 2021, pursuant to which banks were required to increase the portfolio of loans and credit facilities (direct and indirect) for micro, small, and medium-sized enterprises from 20% to 25% of the position in December 2020, with the commitment to direct 10% to 25% of the credit facility portfolio towards financing small enterprises, and also with reference to the Circular Letter dated December 15, 2022 regarding the extension of the implementation of those mandatory ratios until December 31, 2023, the Board of Directors of the Central Bank of Egypt, in its meeting held on January 16, 2024, approved the following decision:

1. The implementation of the first clause of the instructions issued pursuant to the Circular Letter dated February 22, 2021 (which was previously extended for one year ending on December 31, 2023) regarding the obligation for banks to achieve a ratio of 25% of the portfolio based on the position on December 31, 2020 to finance micro, small, and medium-sized enterprises, and to direct 10% of it towards financing small enterprises, for an additional year ending on December 31, 2024.

2. Banks have absolute freedom to collect all guarantees commensurate with the credit facilities granted in light of the credit studies prepared for customers, as well as to obtain cheques if necessary.

3. The continuation of the validity of the remaining clauses of the instructions in matters not explicitly addressed herein.

Please be kind enough to alert regarding compliance with the above.

Yours faithfully, Hassan Abdallah