Banks operating in Egypt have begun conducting an inventory of customers who have benefited from the Central Bank of Egypt’s (CBE) initiative to delay loan instalments, launched in March for a period of six months, due to the novel coronavirus (COVID-19) pandemic.
Banks are currently in contact with customers to determine the method of repayment, with the customer free to choose between extending the loan repayment period for additional six months or increasing the value of monthly instalments.
According to a number of officials, banks are keen to choose the best method that takes into account the customer’s ability to pay, so that they are not exposed to default.
In March 2020, the CBE issued a decision to postpone the repayment of loan instalments owed by customers for a period of six months, due to the economic repercussions of COVID-19 crisis.
Yehia Aboul Fotouh, Vice Chairperson of the National Bank of Egypt (NBE), said the deadline for delaying payment of customer loan instalments will end on 30 September.
He noted that the NBE is currently reviewing the number and data of clients benefiting from the initiative. Customers will be approached regarding the appropriate mechanism to pay the instalments that have been postponed, in light of the CBE’s instructions, whilst taking into account customer circumstances.
On Monday, the CBE issued new instructions to banks regarding deferred loan instalments.
The CBE directed banks to take appropriate measures against customers whose cash flows were affected during the current crisis. This was put into effect with the aim of reducing the burdens and pressures on customers, especially with regard to repayment of loan instalments.
It emphasised that banks can restructure clients’ debts with the aim of reaching a new credit facility structure.
The CBE also stated that this can be implemented via alternative solutions, including increasing the period of granted facilities and restructuring the due instalments without calculating any fines.
Additionally, customers will have the possibility of granting a grace period to companies in light of the nature of their activities and future cash flows in a manner that does not affect their liquidity.
Hamdy Azzam, Executive Vice-Chairperson of the Industrial Development Bank (IDB), said that his bank is currently carrying out an inventory for the number of clients who have benefited from the loan instalment delay initiative. He pointed out that customers are being contacted to determine the method of payment.
He explained that the bank allows for the customer to choose between extending the loan for a period of six months or increasing the value of the instalments.