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CBE imposes restrictions on cash transactions, penalty on contravening car dealers - Daily News Egypt

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CBE imposes restrictions on cash transactions, penalty on contravening car dealers

The CBE has set a daily limit for cash deposits and withdrawals at bank branches for a temporary period at EGP 10,000 for individuals and EGP 50,000 for companies. The latter are exempt from these limits in case of paying salaries or other obligations.


The Central Bank of Egypt (CBE) is to put in place penalties on car dealerships that ignore the financial inclusion programme and use cash transactions rather than electronic payments.

CBE Governor Tarek Amer said fines will be imposed to curb cash exchanges, particularly as dealerships have bank accounts with electronic payment capabilities. The move is in line with the current government recommendations to ease crowding and the CBE’s limit for daily cash deposits and withdrawals due to the ongoing coronavirus (Covid-19) pandemic.

The CBE has set a daily limit for cash deposits and withdrawals at bank branches for a temporary period at EGP 10,000 for individuals and EGP 50,000 for companies. The latter are exempt from these limits in case of paying salaries or other obligations. There is also an EGP 5,000 daily limit for deposits and withdrawals from ATMs. The limits have been set as part of the state’s citizen health and safety efforts, and to curb the spread of the coronavirus.

Alaa El Saba, a board member of the Cairo Chamber of Commerce’s Auto Division, said the CBE’s decision to limit withdrawals and deposits in bank branches aims to limit the spread of the coronavirus, although it affected many businesses. However, it may not be very effective as it led to more customers lining up in front of banks and ATMs, with customers needing withdrawals of EGP 50,000 having to visit the bank five times instead of once, he explained.

El Saba added that some companies’ daily revenues could amount to EGP 1m, and would be unable to deposit only EGP 50,000 per day.

He, however, praised the transformation to electronic payments as one of the best financial systems worldwide, and urged banks to process transactions quickly to help the system succeed.

El Saba noted that the cashless transformation requires that customers be aware of its benefits, and turn to  cards and bank transfers for future transactions.

Ahmed El Ghorab, Director of B Auto, said the CBE decision could help companies avoid embezzlement that may happen under the current circumstances.

El Ghorab added that 90% of companies working in the auto sector have bank accounts, and use bank transfers or cheques. Most car exhibitions, however, use ATM transactions to protect citizens.

He emphasised the need to raise customer awareness of the importance of electronic transactions as many car companies already refuse cash transactions in large amounts, depending on bank transfers instead, and dealers and distributors undertake cashless transactions among themselves to prevent money laundering.

Osama Aboul Magd, Chairperson of the Egyptian Automotive Dealers Association, called for the CBE’s decision to limit deposits to be cancelled, as it may reduce deposit volumes and increase withdrawal rates from banks.

Aboul Magd said that a customer who wants to buy a car for EGP 1m will have to visit the bank to deposit his cheque 20 times. He added that the decision also ignored tens of millions of Egyptian pounds worth cheques that have not been cashed yet.

He also said that the auto market will not bear this ‘unstudied’ decision, pointing out that consumers wishing to purchase a car will not put the financial amount in the bank. Instead, the financial transactions will turn into cash transactions that contradict the decision’s main objective and cause a gap in the available liquidity for all sectors.

Aboul Magd noted that this decision potentially creates a major crisis that may outweigh those resulting from the decision to limit foreign currencies withdrawals and deposits. The latter decision prompted many consumers to keep the foreign currencies they own, leading to higher foreign exchange rates against the local currency, which eventually led to inflation.

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https://dailyfeed.dailynewsegypt.com/2020/04/07/cbe-imposes-restrictions-on-cash-transactions-penalty-on-contravening-car-dealers/
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