Egypt's new lending rules to have positive impact on bank credit activity

GMT 14:27 2016 Friday ,15 January

Arab Today, arab today Egypt's new lending rules to have positive impact on bank credit activity

Egypt's new lending rules to have positive impact
Cairo - MENA

Moody's Investors Service on Thursday said that the new lending rules adopted by Egypt would have a positive impact on the country's banking credit activity.

The move would encourage banks to lend to a wider range of clients, as part of efforts to mitigate credit risk and boost growth, the Service said in a statement.

In a circular published on its website Monday, the Central Bank of Egypt cut the maximum amount that banks are allowed to lend to a single client to 15 percent of their Tier One capital, down from 20 percent previously, to reduce the risks associated with lending to a small number of large clients.

In a separate circular, it said that banks were also relying too heavily on retail lending, including personal, car and housing loans, and placed new limits on consumer credit.

It also cut the total sum that banks can invest in money market funds to 2.5 percent of their total deposits in local currency from 5 percent previously, a move bankers say could reduce their holdings of Egypt's high-yielding government debt.

The changes follow an announcement by the central bank on Sunday that it would push ahead with implementing President Abdel Fattah El Sisi's plan to increase bank lending to small and medium-sized companies (SMEs) as part of efforts to boost growth and create private sector jobs.

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بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
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