The Egyptian House of Representatives has approved the long-awaited Banking and Central Bank Act with several new provisions sending it to the State Council for final legal review.
The legislation, which received a preliminary nod from the House earlier this month, would give the Central Bank of Egypt (CBE) increased discretionary powers to regulate the banking sector. The bill won’t become a law until returned to the House for a final vote by the general assembly. It would also require President Abdel Fattah El Sisi’s signature.
The draft was prepared by the Central Bank of Egypt to maintain, according to experts, the banking sector’s safety and supervise bank.
The new banking bill will boost development in Egypt, being revolutionary in terms of dealing with the challenges that the fiscal and banking system is facing.
The law will allow the CBE to provide short-term bailout funding to struggling banks. This would come in the form of a three-month to one-year loan carrying an interest higher than the market average.
The law’s latest provision, added yesterday after a proposal from the CBE, will put the central bank in charge of licensing companies that want to offer credit risk guarantees. Credit risk guarantee arms must be established for the sole purpose of providing services to protect receivables against defaults and must have a minimum of 50 million Egyptian pounds in paid-in and issued capital. Companies interested in setting up credit guarantee arms will be subject to a 100k pounds “inspection fee” and 50k pounds for every other new branch.
