Regulatory Alerts2012-05-10
Added · Updated
Reducing the cash deposit for documentary credits or promissory notes for the account of merchants for trading or for the account of government agencies from 100% to 50%
The Central Bank of Egypt reduces the mandatory cash deposit requirement for documentary credits, promissory notes, and guarantee letters issued for importing goods for trading purposes or for government agencies from 100% to a minimum of 50%. This adjustment applies to transactions for merchants and government entities, while imports for non-trading purposes such as capital goods or raw materials remain subject only to standard banking rules. Banks are required to determine the specific cash deposit ratio for each case based on their credit policies and client studies, ensuring compliance with central bank credit granting guidelines, adequate market information, and periodic policy reviews to cover emerging risks. The directive mandates full adherence to these requirements effective from July 1, 2010, and clarifies that banks may set ratios above the 50% floor at their discretion.
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