CBE Announces Requirements of Industry Support Initiative worth EGP 30 billion

The Central Bank of Egypt directed banks operating in Egypt to start activating the industry financing initiative at a reduced return rate of 15%, following the approval of the Cabinet at meeting.

The Central Bank explained, in a circular letter addressed to banks, that the initiative to support priority industrial sectors will be launched in accordance with the requirements received from the Ministry of Finance, including that the maximum value of the initiative, which is EGP 30 billion to finance the purchase of machinery, equipment and production lines.

The specifications of the industry financing initiative include that the maximum period is 5 years from the start date, which is the period during which the low return rate is used.

The Central Bank indicated that the maximum financing for a single customer within the initiative is EGP 75 million, and for financing a single customer and related parties EGP 100 million, and the amount of credit available within the initiative is determined for each customer in light of the size of their businesses and the governing banking rules.

The dealings of a single client, as well as a single client and the parties associated with him, are limited to one bank only, and the client's data is registered on the electronic system of the Industrial Financing Initiative at the Central Bank to tighten control over the limits set for the initiative.

It added that priority will be given to benefiting from the initiative for establishments located in the areas most in need of development and the most workers, namely, south of Giza Governorate and the governorates affiliated with the Suez Canal region "Port Said - Ismailia - Suez East of the Canal", border governorates including the Red Sea Governorate from south of Safaga, Upper Egypt governorates.

CBE noted that the return rate taken as a basis for calculating compensation is the Central Bank's credit and discount rate + 1%, and the companies benefiting from the initiative bear a reduced return rate of 15%, while the Ministry of Finance bears the difference in the return rate "the difference in the Central Bank's credit and discount rate + 1% - 15%", and compensation is disbursed to the banks participating in the initiative on a quarterly basis.

Companies benefiting from the initiative will bear the difference in the credit and discount rate if it increases from the current rate at the time of launching the initiative, meaning that the maximum limit that the Ministry of Finance will bear will be 13.75%, in addition to what is determined as an additional incentive for the percentage of increase in local value added.

Customers are prohibited from using the credit facilities granted to them within the framework of this initiative to pay any other debts owed to them in the banking sector.