The Central Bank of Egypt (CBE) has issued a directive requiring banks not to grant credit facilities to customers for the purpose of financing the capital of companies under incorporation, funding capital increases, or using bank financing to support cash dividend distributions or employee share award programmes.
In a circular issued on Sunday, the CBE said the decision reaffirms the regulations governing the granting of credit facilities and forms part of broader efforts to strengthen oversight of lending by the banking sector. The measure aims to ensure that financing is directed towards economic and productive activities in line with established banking rules and practices.
The central bank noted that the decision is based on the provisions of a circular issued on 24 March 2003, which prohibited the granting of short-term credit facilities to finance the capital of companies under incorporation or to cover the legally required 25% paid-up capital contribution.
The directive also refers to a circular issued on 20 September 2021, which prohibited the granting of credit facilities to finance cash dividend distributions to shareholders or employees.
