The Central Bank of Egypt (CBE) prohibited Egyptian banks from offering retail loans with monthly instalments that exceed 35% of a debtor’s net income.
Retail loans include personal loans, personal car loans, and personal real estate loans. Banks are allowed to provide a loan with monthly payments that are 40% of a debtor’s monthly income in the case of personal real estate loans in accordance to the Law 148 of 2001.
CBE noted that it found in the past that the banks expanded their loan portfolios directed to consumption purposes. In addition, it found that there is incompatibility between the value of these loans’ payment instalments, the customer’s income, and the granted amounts.
It explained that this percentage reached 50-60% in some banks, which increases the rate of risk and has an adverse effect on the medium term the portfolio’s quality.
