Conditions for bank financing under exceptional circumstances in the new law.. Know it

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Cairo – Samia Saeed – Section 11 of the Law on the Central Bank and Banking System states that “without prejudice to the provisions of Section 10 of this Law, the Board of Directors may, in exceptional circumstances, approve the provision of financing to banks. As agents for the Government of low solvency or Defaulting Bank with their capacity. , subject to the following conditions:

Aadhar is necessary to maintain the banking system.

A bank’s ability to continue through a plan of restructuring or settling its positions within a period determined by the Central Bank.

The financing period should not exceed 180 days, it may be extended for another period or periods, provided the total financing period does not exceed one year.

This should be in lieu of adequate guarantees from the bank and accepted by the Central Bank.

The interest rate applicable on the financing should be higher than the average lending rate prevailing in the market.

The Ministry of Finance agrees to give a legal guarantee to the Central Bank, wherein it undertakes to provide financial allocation for the entire funds provided.

In this case, the bank to which the financing is provided is subject to strict supervision by the Central Bank.

Section 10 states: The Board of Directors approves the withholding of emergency financing for any bank suffering from liquidity crunch subject to the following conditions:

Bank must be solvent

The financing period should not exceed 180 days, it may be extended for another period or periods, but the total financing period should not exceed one year.

The financing shall be against adequate guarantees accepted by the Central Bank.

The interest rate applicable on the financing should be higher than the average lending rate prevailing in the market.

Mojtaba Sadira

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