The Central Bank of Egypt (CBE) vowed to punish banks that lagged behind on the implementation of the initiative launched earlier this year to support the financing of small- and medium-sized enterprises (SMEs).
The CBE had earlier committed banks to grant no less than 20% of total loans to SMEs over four years.
CBE sub-governor Tarek El-Kholy said that sanctions could be applied to banks that did not adhere to implementing the initiative. However, he did not specify the means of punishing banks that did not reach the targeted numbers.
He pointed out that the CBE might resort to increasing the capital adequacy of those banks, decide opening new branches to serve SMEs, or specify their locations in remote areas.
El-Kholy’s remarks came during the second financial leasing conference held on Tuesday.
He added that the funding of SMEs is an important national task. “Banks’ adherence to implementing the initiative should be a matter of nationalism,” he stressed.
He noted that the CBE is monitoring the implementation of its initiative on a quarterly basis, pointing out that funding SMEs at a low interest rate of 5% from unemployed loans is “a good thing for banks.”