The Federation of Egyptian Banks revealed that the Central Bank of Egypt’s decision to stop dealing with collection documents in the implementation of all import operations, and to work with documentary credits only, as of the beginning of March 2022, is a banking regulatory procedure issued in line with recent decisions of the Council of Ministers regarding the governance of import procedures and to complement the pre-registration system. for shipments.
The Central Bank of Egypt had decided to stop dealing with collection documents in the implementation of all import operations, and to work with documentary credits only, starting from next March. He pointed out at the time that the decision aims to facilitate the process of purchasing goods from abroad. Documentary letters of credit are more complex – but they offer more protection to the issuer.
The issuing bank of the letter of credit to the importer will require a lot of documents to make the transaction, but it will also enter into a contract obligating it to pay the exporter if the importer defaults for any reason. While the Central Bank’s decision excluded branches of foreign companies and their subsidiaries, and allowed banks to accept collection documents received for goods that had already been shipped before the issuance of this decision. He stressed that these procedures come within the framework of the governance of import operations and the activation of the pre-registration system for shipments, which will be applied compulsorily as of the beginning of next March.
The Banks Association explained that these measures achieve 5 advantages, as they aim to raise the level of goods imported from abroad, protect the health and money of citizens, as well as the governance of the foreign trade system, protect the national industry, and finally preserve the country’s sovereign resources.
He pointed out that the banks deal with the decision in accordance with the determinants approved by the Central Bank in implementing import operations and working with documentary credits, noting that with regard to goods previously shipped before the issuance of this decision, they are allowed to be dealt with through collection documents at the request of the customer, and every exception has been made From branches of foreign companies as well as subsidiaries of foreign companies from that decision within the scope of import operations from the parent company and its groups only.
He stated that the Central Bank directed all banks to implement the decision according to several determinants, which included the actual implementation starting on February 22, 2022 to accommodate the shipments that were prepared for them before the issuance of this decision.
The limitations also included excluding all of the incoming express mail shipments, and shipments up to 5000 US dollars or its equivalent in other currencies, in addition to medicines, serums and chemicals related to them and the following food commodities (tea – meat – poultry – fish – wheat – oil – powdered milk – Baby milk – beans – lentils – butter – corn).
The limitations also include reducing all commissions for documentary credits in all banks to be like commissions for collection documents, increasing the existing credit limits for customers, opening new limits for new customers in proportion to the import volume of each customer, and opening all required documentary credits from all customers upon their request.