CAIRO - 14 December 2021: The Board of Directors of the Central Bank of Egypt (CBE) issued Tuesday a package of decisions aimed at supporting small and medium-sized companies with the aim of alleviating them and supporting them to continue working and producing, preserving employment and providing the liquidity required to continue the production process.
CBE said in a statement that the decisions come in light of the directives that all sectors of the state should combine efforts to support troubled customers, remove them from their stumble and reintegrate them into the banking sector, and in light of the continuing repercussions of the Coronavirus crisis and its impact on various economic sectors, specifically the impact of this on the ability of small and medium-sized companies to Fulfilling its obligations with banks, which may increase the chances of accumulating debts on them.
The decision provides for facilitating some of the regulatory requirements for small and medium-sized companies related to their classification as defaulting clients, in light of the fact that they are the most affected by the repercussions of the Corona virus crisis, which is still ongoing.
Restructuring credit facilities for defaulting clients
The facilities include extending the period on the basis of which the customer is classified as defaulting by the banks, in addition to the need for banks to restructure the credit facilities for defaulting customers according to their cash flows and their ability to pay while offering alternatives that would support them, including increasing the duration of the facilities and restructuring the outstanding installments as well as granting them appropriate grace periods.
In a related context, in order to unify the practices followed with regard to the management of non-performing debts by banks, it was decided to establish a supervisory framework for non-performing debts, as the instructions issued by the Central Bank laid the foundations for dealing with credit facilities covered by cash guarantees and the same in the event of their irregularity, as well as establishing a specific time frame during which banks will execute irregular facilities, as well as stipulating the procedures to be taken in cases of scheduling and settlement of irregular customers.
Finally, the decision stressed the necessity of presenting the position of the irregular facilities on an ongoing basis to the boards of directors of banks and taking the necessary measures regarding their follow-up.
The foregoing comes in light of a package of measures taken at the state level under the leadership of the President of the Republic with the aim of restarting factories and companies in order to achieve the desired growth rates. In line with the current trend of the Central Bank to support small and medium enterprises in a way that supports the national economy.
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