Banks in Egypt are in the process of formulating their views regarding the amendments needed for the Law 88\2003, senior banking sources have revealed, explaining that the government had asked banks to submit their proposed amendments aimed at boosting foreign and local investment.
The amendments are also targeting the facilitation of investment-related litigation as well as bringing default customers back to solvency.
According to the sources, the majority of private and government bank directors have contributed to the three proposed amendments under the auspices of Hesham Ramez, the governor ot the Central Bank of Egypt. They added that the government is expected to approve the banking law changes before the economic summit in Sharm el-Sheikh where it intends to present them to the guest investors.
The first amendment, the sources explain, is related to legalizing electronic transactions that could induce a shift from the current paperwork, in addition to lowering the costs. They argued that maintaining the current paper system in inter-bank transactions would be difficult given the CBE’s tendency to increase the number of customers and integrate unofficial businesses in the mainstream economy.
The second amendment, according to the sources, is focused on insolvent customers. The banks are proposing articles that prioritize bringing them back to solvency above the settlement of sovereign debts, especially that banks used to be wary of refinancing delinquent customers for fear of confiscation of the funds by customs and insurance authorities.
The same sources added that the government had complained about the banks’ inability to bring default clients or factories back to solvency.
As for the third amendment, which is linked to the second proposal, it suggests that courts should no longer receive the 7% percent fee collected from the liquidation of insolvent customers’ funds and assets before litigation procedures are complete.
The sources have explained that the practice of courts collecting the fee before litigation was over has provoked the procedures to extend for decades, with the banks failing to claim their dues after the courts and the government collect their debts from the client. The new amendment would ensure that the courts collect their fee after the assets are sold.
