Banks obliged to separate microfinance from retail loans

Trial project between civil associations and banks to benefit from digital services in obtaining financing and instalment payments, according to the CBE governor

The Central Bank of Egypt (CBE) has obliged banks operating in the Egyptian market to separate microfinance from retail loans and classify them based on the gender of the person obtaining the loan, in addition to the type of economic activity, according to the governor of the CBE, Tarek Amer.
Amer said in a speech during the event of launching the microfinance initiative launched by the bank last week that guiding standards were set for banks, through which all associations working in the field of microfinance are studied credit-wise in order to reach a unified assessment model to refer to in the evaluation of institutions that seek to be provided with credit facilities from banks.
According to Amer, an agreement was made with the Egyptian Financial Supervisory Authority (EFSA) to issue a report about the performance of associations and institutions working in the field, in addition to information related to the size of financing provided to them.
The CBE is currently having a trial project between several civil associations and a number of banks in order to understand the ways of benefitting from digital financial services. The results of the project will be announced soon, according to Amer.
He explained that the project includes offering services to provide loans and collect their instalments through a grid of microfinance companies and civil associations working in the field. In addition, the project includes training staff in the field with the knowledge of banks in order to get familiar with the identity of customers based on the rules set by the CBE in terms of payment services through mobile phones.
Amer stressed the interest of the banking sector in microfinance due to its role in enhancing the economy; its impact in providing jobs and increasing local production in the fields of agriculture, industry, and renewable energy; and its ability to achieve financial inclusion.
He stressed that the initiative launched to finance the institutions working in the field aims to benefit from the presence of these institutions in places the banks' networks do not reach, especially in remote places.
According to Amer, the initiative aims to bridge the financial gap that many companies working in the field suffer from, which is estimated at EGP 24bn.
He noted that there is ongoing cooperation between the CBE, the EFSA, and the Egyptian Union of Microfinance to support the sector, pointing out the role the EFSA played in deciding the legislative framework and its supervision of the bodies providing this kind of financing, as well as issuing licences for them.