Note: The data are provided for informational purposes only and in some cases, the information may be incomplete, not fully accurate or out of date. For more information on how data are compiled, see "A Note About Sources." The date of the last update for each country is marked in the section "Country Indicators." We welcome updates and comments. Click here to write to us.
Ownership structure of banks (and financial institutions if available)
COMMERCIAL BANKS: 19 private or joint-venture banks; 4 public-sector banks. NON-COMMERCIAL: 10 private or joint-venture banks; 7 off-shore banks; 3 specialized development banks (Egyptian Industrial Development Bank; Arab Egyptian Real Estate Bank; and Principal Bank for Development & Agricultural Credit [PBDAC]) (as of June 2006) (Structure of the Egyptian Banking System).
Formal and Semi-Formal Sources of Microfinance
Commercial Banks; Social Fund for Development; National Postal Authority.
NGOs.
Wholesale Lender(s)
1. The Social Fund for Development (SFD) is charged with the promotion of small and very small firms. Among the services that it provides to firms is financing that is funneled through associations, societies, and NGOs in every governorate. 2 . The Assistance Fund for Associations and Non-Governmental Organizations uses government funds and donations to support the activities of associations and NGOs. (Small Enterprises Law & Regulations) (NGOs Law).
Definitions of microfinance or microcredit
No legal definition for "microfinance" or "microcredit" exists. However, the Law on Development of Small Enterprises defines a "very small enterprise" as an enterprise engaging in economic activity whose paid-up capital is less than approx. USD 9,100 (50,000 EGP) and a "small enterprise" as one whose paid-up capital is not less than approx. USD 9,100 (50,000 EGP) but shall not exceed approx. USD 182,000 (1 million EGP) and has no more than 50 employees. (Small Enterprises Law & Regulations).
NGO microfinance provider formalization or transformation issues
Currently, specialized MFIs (such as microfinance banks, cooperative banks, or other non-bank commercial financial institutions) do not exist in Egypt. In addition, NGO MFIs are not subject to microfinance-specific supervision (they receive the same supervision as other NGOs), which affects their ability to develop policies and procedures that support sustainability and the potential to transform in the future (Moussa, 2007).
Ongoing microfinance policy development status
1. As of early 2007, the Egypt National Microfinance Network (EMFN) was established as a second-tier organization that aims to support MFIs and establish a self-regulatory organization. 2. As of early 2007, the USAID-funded Egypt Microenterprise Finance project was working on the establishment of a microfinance-specific private-sector credit bureau (Moussa, 2007).
Safety net availability: insurance, pension, etc.
Old age pension; disability pension; survivor benefits; sickness benefits; maternity benefits; worker's compensation; unemployment benefits (Social Security in Egypt, SSA)
Recommended Reading
"Regulation and Supervision of Microfinance in Egypt" (Moussa, 2007). Essays on Regulation and Supervision No. 21.
General Participation in the Financial Services Market
As of early 2007, only 3 banks (Bank Misr, Agricultural Bank for Development and Credit [PBDAC], and National Bank for Development [NBD]) were providing microfinance services. Other banks target wealthier clients (Moussa, 2007)
According to bank complaints, stamp duties of approx. USD 3.50 (19 EGP) associated with opening a savings account make it unprofitable to offer small-value savings accounts (Moussa, 2007)
Non-bank Financial Institutions
Insurance Companies and Funds (including National Authority for Social Insurance)
While many insurance companies exist, 4 providers (3 of which are state-owned) account for approx. 90% of market share (Moussa, 2007)
TOTAL INVESTMENTS: Approx. USD 46 billion (252 billion EGP) (as of June 2005), of which insurance companies accounted for approx. USD 5.6 billion (31 billion EGP) and the National Authority for Social Insurance accounted for approx. USD 40 billion (221 billion EGP)
Non-poor customers, although some products are affordable for microentrepreneurs (Moussa, 2007).
Supply-driven approach is not creating appropriate products for the micro sector (Moussa, 2007)
Government lending funds and special purpose institutions
National Postal Authority
1, with approx. 3,400 post offices and approx. 6,000 postal agencies (Moussa, 2007).
Low- and middle-income savers throughout urban and rural Egypt (Moussa, 2007).
Non-profit institutions
Nongovernmental Organizations
Not permitted to capture savings or pledge their assets to obtain a loan (Moussa, 2007).
General Approach to Regulating
Legal basis for regulating
Definition or description of institution
Regulator(s) and role of regulator(s)
Activity that determines required regulatory status
Banks
Banks
1. The Law of the Central Bank, the Banking Sector and Money (Law No. 88 of 2003, as amended through 2005) [hereafter Banking Law].
2. Executive Regulations of the Law of the Central Bank, the Banking Sector and Money (Presidential Decree No. 101 of 2004) [hereafter Banking Regulations]
An company engaged in "banking business" (defined as "any activity comprising, basically and habitually, the acceptance of deposits, the obtaining of finance, and the investment of these funds in providing finance and credit facilities and contributing to the capital of companies, and all that is considered by banking tradition as bank business.") (Banking Law)
The Central Bank of Egypt (CBE). Regulates monetary, credit, and banking policy and ensures banks’ financial soundness. (Banking Law, Art. 6).
Accepting deposits, obtaining finance and using these funds for investment or credit (Banking Law, Art. 31)
Non-profit institutions
Nongovernmental Organizations
Law on Nongovernmental Organizations (Law No. 84 of 2002) [hereinafter, NGOs Law].
An association or NGO. Associations are groups of natural or juridical persons (or both) totaling at least 10 persons, and oriented for a purpose other than for material profit. NGOs are similar organizations but may be established by a single founder and do not require a minimum of 10 persons (NGOs Law, Art's 2, 55-56)
Ministry of Insurance and Social Affairs (NGOs Law, Introduction -- Art. 2)
Provision of credit-only financial services in a not-for-profit form.
Organizational Registration
Laws and regulations governing registration
Agency administering registration
Required legal form of organization
Restrictions on ownership
Costs of registration [money and time]
Banks
Banks
INCORPORATION: Law of Joint Stock Companies, Partnerships Limited by Shares, and Limited Liability Companies (Law No. 159 of 1981). LICENSING: Banking Regulations
INCORPORATION: Commercial Registry. LICENSING: Central Bank of Egypt (CBE) (Banking Regulations, Art. 4)
Egyptian joint stock company; public legal person created for the purpose of banking; or a branch of a foreign bank (Banking Law, Art. 32)
1. Ownership of more than 10% of the bank’s issued capital must be approved by Central Bank of Egypt (CBE), following considerations detailed in the Banking Regulations. 2. Ownership of over 5% but no more than 10% of the bank's issued capital requires notification to CBE (Banking Law, Art's 49-55) (Banking Regulations, Art's 12-16).
APPLICATION FEE: Approx. USD 1,800 (10,000 EGP) for the head office and approx. USD 1,270 (7,000 EGP) for each branch or agency. TIME: Decisions will be made within 30 days. (Banking Law, Art. 33)
Non-profit institutions
Nongovernmental Organizations
NGOs Law
Ministry of Insurance and Social Affairs (NGOs Law, Introduction -- Art. 2)
COST: Up to approx. USD 18 (100 EGP). TIME: Up to 60 days (NGOs Law, Art's 5-6).
Licensing Requirements and Standards
Standards for ownership officers
Feasibility study/business plan
Audit of Proposed Founders, Owners, Officers
Operating Manuals
Prohibited sources of funds
Banks
Banks
ALL BANKS: All banks must show -- to the CBE's satisfaction -- that their Directors and Officers have the competence and necessary banking expertise to manage and supervise the banking institution (Banking Regulations, Art. 5). PUBLIC BANKS: A public bank’s Board of Directors must have a Chairperson; two deputy Chairpersons; and 6 members who must be specialized in banking, monetary, financial, economic, and/or legal affairs, with previous banking experience (Banking Law, Art. 90).
Feasibility study required that includes bank’s purpose, intended services, and a market study on the potential for deposit mobilization and investing. (Banking Regulations, Art. 4)
Must submit information on the financial position of board of directors and executive and managing directors of the bank, though no formal auditing requirements are made of this information. (Banking Regulations, Art. 5)
Must also submit bank's proposed organizational structure; and credit, investment, and risk management policies (Banking Regulations, Art. 4)
None. Private entities may own shares in state-owned banks.
Non-profit institutions
Nongovernmental Organizations
ASSOCIATIONS: Board of Directors must be an odd number from 5-15. If there are foreign Directors, they must be proportional to the percentage of foreign membership of the association. Ministry of Insurance and Social Affairs may reject candidates that fail to satisfy certain conditions. NGOs: Min. 3 members of Board of Trustees, appointed by founder(s). Appointments and changes to Board of Trustees require that NGOs notify Ministry and General Federation of NGOs (NGOs Law, Art's 32-34, 59).
Must detail resources available to meet the organization's goals (NGOs Law, Art's 3, 56).
Must submit name, age, nationality, vocation, and address of each founding member (NGOs Law, Art. 3)
Must provide information on: procedures for appointing representatives and for meetings; conditions for membership; financial control system; rules for amending statutes; and rules re: setting up branches (NGOs Law, Art's 3, 56).
ASSOCIATIONS: Funds from abroad prohibited. NGOs: NGOs may accept donations under certain circumstances. NGOs may accept donations from: approved foreign NGOs operating within Egypt (if authorized by the Ministry of Insurance and Social Affairs); the general public (if Ministry approves the NGO's fundraising application; and from "abroad" (if approved by the Ministry) (NGOs Law, Art's 17, 61) (NGOs Law Executive Regulations, Art's 3-5, 56-58, as described in Analysis of NGOs Law Regulations, EOHR).
Capital and Reserves
Minimum capital
Minimum capital adequacy/gearing ratios
Forms of capital recognized
Risk-weighting of assets
Loan loss provisioning, write-off
Reserves, Liquidity requirements
Banks
Banks
DOMESTIC BANKS: Approx. USD 91 million (500 million EGP); BRANCHES OF FOREIGN BANKS: USD 50 million (275 million EGP) or equivalent (Banking Law, Art 32)
LOCAL BANKS: Minimum capital to risk-weighted asset ratio of 10%, of which min. 5% must be core (Tier 1) capital. BRANCHES OF FOREIGN BANKS: N/A (Central Bank Annual Report 2005/2006)
CORE (TIER 1) CAPITAL: Paid-up capital; reserves; retained profits. SUPPLEMENTARY (TIER 2) CAPITAL: General risk provisions for loans and regular contingent liabilities; loans of over five years' maturity (20% of the value of each loan must be amortized in each of the last 5 years before it matures); 45% of the increase in fair value over the book value of certain investments. (Central Bank Annual Report 2005/2006)
Provisioning: 60-180 days overdue: 20% 180-360 days overdue: 50% Over 360 days overdue: 100%
LIQUIDITY: Liquidity ratios of 20% of domestic currency and 25% of foreign currency required at all times (Central Bank Annual Report 2005/2006). The bank must also keep funds equivalent to all its obligations in addition to its minimum capital requirement (Banking Law, Art. 39). RESERVES: A reserve at CBE equaling a minimum of 14% of deposits is also required (Banking Law, Art. 74) (see Central Bank Annual Report 2005/2006, referencing Decision No. 1910 of the CBE's Board of Directors, dated Sept 20, 2001).
Non-profit institutions
Nongovernmental Organizations
N/A
N/A
N/A
N/A
N/A
N/A
Risk Management Guidelines
Guidelines & restrictions on financial services
Guidelines & restrictions on operational rules
Guidelines & restrictions on interest rates
Concentration of risk
Connected/insider business
Banks
Banks
PERMITTED: Deposit-taking of all kind; loans; foreign exchange transactions; and any other “traditional” banking business. PROHIBITED: Issuing bills payable upon demand; accepting its own shares as collateral (with limited exceptions for settlement of debts); deal in movable or real property, except that used for bank business or the settlement of debts. (See Banking Law, Art's 31, 60, 113)
Banks must obtain approval from the Central Bank of Egypt (CBE) prior to opening new branches (Banking Law, Art. 32) (Banking Regulations, Art. 8). CBE must also be notified of any changes in board members, general managers, or directors and retains the right to request any changes in bank management (Banking Law, Art. 43) Internal auditing committee must be formed and follow CBE mandates in inspection (Banking Regulations, Art. 27)
No restrictions, although banks must disclose interest rates and fees to customers (Banking Law, Art. 40) (Banking Regulations, Art. 17) In practice, however, The Principal Bank for Development and Agricultural Credit (PBDAC) is sometimes subject to government-imposed interest rate reductions,
MAX. CREDIT TO INDIVIDUAL AND/OR RELATED GROUP: 30% of bank's capital base (Banking Law, Art. 71).
No loans or guarantees may be granted to Board members, auditors, shareholders, or their relatives (to 2nd degree of consanguinity) (Banking Law, Art. 61).
Non-profit institutions
Nongovernmental Organizations
PERMITTED: Credit services. PROHIBITED; "Profit-oriented activity", although generating income that contributes to the realization of the NGO's purpose is not prohibited; speculative investment of funds (NGOs Law, Art's 11, 22).
Unlike banks, NGOs are not exempted from interest rate restrictions in the Civil Code (4% for civil debts and 5% for commercial debts). In practice, this has not been a significant problem, but the existence of this provision is occasionally used in court as an attempted justification for nonpayment of interest on loans from NGO MFIs (Moussa, 2007).
N/A
N/A
Reporting and Supervision
Supervision Method
Supervision costs and fees
Disclosure and reporting requirements
Depositor protection mechanisms (e.g., deposit insurance or lender of last resort)
Banks
Banks
Central Bank of Egypt (CBE) on-site examinations focus on ensuring appropriate risk management and internal control systems are in place and in revising the financial soundness of the bank, employing the CAMEL™ rating system. All banks registered with the CBE are subject to on-site examination at least once every two years and other limited examinations as necessary.
CBE will assess a fee every January, not to exceed one EGP (USD .2) per each 10,000 EGP (USD 1,818) of the bank’s average total monthly position. (Banking Law, Art. 86)
MONTHLY: Full financial statements to CBE (Banking Law, Art. 75). QUARTERLY: Audited financial statements, published in two daily newspapers (Banking Law, Art. 73). SEMI-ANNUALLY: Consolidated financial and prudential reports, including balance sheet, income statement, capital adequacy, deposit of 10 largest depositors, and credit exposure to 10 largest borrowers. ANNUALLY: Annual audited financial statements (at least 21 days before annual meeting); copy of annual report (within 21 days after annual meeting); (Banking Law, Art's 76, 84).
Deposit insurance fund, supervised by the CBE, is to be established. The CBE may also extend credit to banks. (Banking Law, Art's 8, 87).
Non-profit institutions
Nongovernmental Organizations
Ministry of Insurance and Social Affairs (MISA) conducts routine checks of financial statements; requires that a MISA representative be permitted to attend General Assembly meetings and extraordinary meetings of the Board of Directors; and retains copies of minutes from meetings (Moussa, 2007).
1. Capital gains are taxed as income (20%).
2. Dividends 0% (domestic; foreign dividends taxed as income).
3. Interest and royalties: 20% (Egypt Snapshot, Deloitte)
MFI-specific
MFI-specific
NGOs are exempted from taxes on contracts, stamp duties, necessary imports, and real estate (NGOs Law, Art. 13).
Other Relevant Business Legislation
Credit Rating and Reporting Requirements: Content Requirements
Credit Rating and Reporting Requirements: Formatting requirements (e.g., CGAP, GAAP, or other international standards)
Security interests: Valuation
Security interests: Recording
General Applicability
General Applicability
Public credit information registry exists at Central Bank of Egypt (CBE); all loans above approx. USD 5,455 (30,000 EGP) are reported (Banking Law, Art's 65-66) (Banking Regulations, Art 30) (Moussa, 2007).
Egyptian Auditing and Accounting Standards (Banking Law, Art. 73)
Security will be valued by specialized appraisers registered by the CBE. (Banking Regulations, Art. 20)
All non-cash collateral must be valued and registered within the bank; the CBE may inspect and confirm the value of this collateral at any time (Banking Law, Art. 69). Immovable property must be recorded, registered, and verified by a notary public (Banking Law, Art. 102).
