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Central Bank of Egypt Enforces 24% Minimum Interest Rate on Loans

The directive comes in an effort to shore up bank savings from the effect of high-yield certificates of deposit.

Cairo Scene

Central Bank of Egypt Enforces 24% Minimum Interest Rate on Loans

The Central Bank of Egypt has issued a directive to all banks operating in the country, mandating a minimum interest rate of 24% on loans. This directive, effective immediately, aims to safeguard bank deposits from potential negative impacts stemming from the introduction of high-yield certificates of deposit by the National Bank of Egypt and Banque Misr.

According to undisclosed sources within the banking sector, considerations for determining loan interest rates encompass diverse factors such as the bank's cost of funds, strategic expansion initiatives, liquidity attraction, competitive dynamics, and customer base maintenance.

The National Bank of Egypt and Banque Misr recently announced the issuance of new certificates of deposit offering annual yields of 23.5% and 27%, respectively. These rates surpass the prevailing borrowing interest rates in Egypt, which were set at 19.25% by the Central Bank’s Monetary Policy Committee during its last meeting in December 2023.

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