Last Update 5:38
Saturday, 30 May 2020

Egypt: New cash limits introduced

Cash withdrawals and deposits at Egypt’s banks have been limited for individuals and businesses

Ahmed Kotb , Monday 30 Mar 2020
New cash limits introduced
New cash limits introduced
Share/Bookmark
Views: 1663
Share/Bookmark
Views: 1663

The Central Bank of Egypt (CBE) decided to apply temporary limits on daily cash withdrawals and deposits at all banks operating in the country on Sunday in a bid to control panicked withdrawals or hoarding amid the Covid-19 pandemic.

The daily limit for withdrawals is now LE10,000 for individuals and LE50,000 for companies, but the latter are exempt from deposit limits and from limits on withdrawals made to pay salaries. The CBE has also set a limit of LE5,000 for cash deposits and withdrawals from ATM machines.

Credit card dues and cheques worth more than LE10,000 are exempt from the decision, on condition that any cheques amounting to more than 10,000 be cashed over several days or placed in a bank account.

According to the CBE, the measures also aim at reducing crowding or gatherings at the banks at peak times during the withdrawals of salaries and pensions. The CBE called on all citizens to rely more on bank transfers and the use of electronic payment methods. All expenses associated with bank transfers and electronic payments would be cancelled, it said.

Tarek Amer, the CBE’s governor, said via telephone to a talk show on Sunday that huge amounts of money had been withdrawn from the banks lately. “About LE30 billion has been withdrawn from the banks during the last three weeks,” he said. “We want more discipline,” he added.

Cash in the Egyptian market outside banking operations amounted to some LE540 billion, Amer noted, adding that about 15 million people currently use online payments.

He said that many companies should adjust their dealings with cash and opt for bank transactions instead. “Egypt has the highest liquidity rates in the region, and any institution that needs cash can receive any amount through online transactions,” Amer stressed, adding that this was in line with preventative measures and the financial inclusion agenda.

He also said that the new banking system law placed fines on cash transactions beyond a certain limit and that it had set a period of one year to adjust conditions and comply with them. Car showrooms that deal in cash would be fined, according to Amer.

The CBE’s decisions were praised by Hany Abul-Fotouh, a financial analyst, who said they were important to rationalise the many cash withdrawals that had taken place as a result of unjustified fears of a lack of cash amid the pandemic, putting pressure on the liquidity in the banks.

The decisions could also help in reducing the risk of spreading the new coronavirus by limiting the exchange of paper currency that could transmit the infection, he said.

The present curfew and the shorter working day at the banks, he added, had imposed practical difficulties in making money transfers, adding logistical difficulties to transferring funds from the CBE to the banks and from the banks to their branches.

He also said that the implementation of the decisions could act as a test period for a gradual transformation away from a society dependent on cash to one making mostly electronic payments, which was one of the goals of the government’s financial inclusion strategy.

But Abul-Fotouh warned that monetary transactions could be negatively affected in informal markets and remote areas, for reasons related to access to electronic platforms or because of the communication network or because of cash-based traditions.

Some businesses expressed their discomfort with the daily limits on cash withdrawals and deposits. The General Union of Poultry Producers (GUPP) said in a statement that the decisions would disrupt the poultry industry since it relied mostly on cash-based trading.

Changing this system and moving to electronic payments would require time to adequately prepare farms, feed factories, veterinary pharmacies and others with the necessary tools for dealing with electronic payments.

The GUPP called on the CBE to reconsider the decisions for certain businesses that depend on daily cash trading so that they do not suffer a sudden and disruptive shock. It asked for a grace period to be applied to review the situation of such businesses, after which the CBE’s decisions could be applied.

*A version of this article appears in print in the  2 April, 2020 edition of Al-Ahram Weekly

 

Short link:

 

Latest

© 2010 Ahram Online.