Regulatory Alerts2016-03-23
A circular dated March 22, 2016 regarding clarifications regarding instructions for small and medium-sized companies, concentration of credit portfolios, and loans for consumer purposes issued on January 11, 2016.
The Central Bank of Egypt has announced new changes to the definition of small, medium and micro enterprises (SMMEs) starting August 24, 2020. Here are some of the key points: 1. The Central Bank of Egypt has defined a new classification system for SMMEs. According to this definition, small enterprises can have up to EGP 50 million in annual sales revenue, medium-sized enterprises between EGP 50 million and 500 million, and micro-enterprises less than EGP 50 million. 2. The amendment allows banks to provide credit facilities up to a certain limit for SMMEs. Previously, banks were unable to offer credit facilities to such enterprises without the need for third-party guarantees or additional collateral. 3. Banks are now required to apply a new rating system for all SMMEs based on their financial and operational performance. This rating system will be used by the Central Bank of Egypt in assessing the overall health of the Egyptian economy. 4. The Central Bank of Egypt has also modified the definition of small, medium, and micro enterprises (SMMEs). Starting August 24, 2020: a) For newly established small to medium-sized enterprises, the minimum share capital has been increased from EGP 50,000 to between EGP 3 million and EGP 10 million for industrial companies. This is done by merging the definitions of small and medium businesses. Consequently, very small enterprises would be classified as small, considering their share capital. b) For newly established micro to small-sized enterprises, there will be a new classification system based on their share capital, considering their size in terms of annual sales revenue. Starting August 24, 2020, a company with an annual sales revenue between EGP 5 million and EGP 50 million is considered a small business. These changes come as part of the Egyptian government's initiative to support and empower local SMMEs in response to the impact of the COVID-19 pandemic on the national economy.