The legal department of the Central Bank of Egypt (CBE) is now receiving banks’ proposals to amend Banking Law No. 88 of 2003.
The CBE will review the Banking Law in preparation for amending the law in line with developments in local and global banking operations over the past 13 years subsequent to the issuance of this law, deputy governor Gamal Negm announced in April.
According to Ruqaya Riad, legal adviser to the Federation of Egyptian Banks (FEB), the CBE asked the banks operating in local markets to prepare their observations and proposals for the development of this law.
Riad told Daily News Egypt that the recipient of such proposals is the CBE’s legal sector and not the Legal Committee of the FBE.
According to Riad, the CBE’s legal sector will collect banks’ notes and proposed amendments. It will then form a committee of legal experts and bankers to study these proposals and revise them in preparation for drafting and introducing the required amendments to the law. The draft will be submitted to the competent authorities to study it and present it to parliament for approval.
This comes at a time when rumours spread across the banking sector saying that the aim of the Banking Law’s amendment is the introduction of a legal text that defines the extended work of banks’ chief executives, to rationale the decision taken by the CBE’s governor Tarek Amer in March.
On 23 March, the CBE set the CEOs maximum term in any private bank to nine consecutive or intermittent years. Banks with CEOs who have already exceeded this tenure as of 31 December 2015 are granted a deadline to adopt Financial Statements for fiscal year 2016, on condition the CBE’s approval is obtained.
This decision faced a withering attack by a number of shareholders in several banks. Several lawsuits have been raised before the Administrative Court of the State Council to appeal against this decision. Those suits are still in circulation.
Unlike those rumours, which as of yet have neither been proven nor refuted, several banks proposed to amend the Banking Law in line with technological developments recently witnessed by banking operations.
Among these proposals, according to Riad, is the addition of an article that allows the Board of Directors to transfer, save, and secure banks’ documents to electronic systems. These backups will have the same legal authenticity as the original paper documents.
She also said that one of the most important proposed amendments to the Banking Law is to prevent relevant sovereign debt authorities, such as the Egyptian Tax Authority, from collecting their debts from loss-making factories of liquidity pumped by the banks to re-run these factories. This is to prevent wasting banks’ funds.