Banks will be required to call off any legal action they’re taking against factories that are unable to pay off their debts as part of a Central Bank of Egypt (CBE) debt relief initiative, CBE Governor Tarek Amer said in a circular to local banks carried by Youm7. The banks also have to hand back cheques written by the factory owners, and require only promissory notes in the future, according to the circular.

Background: The government and the CBE launched a two-part initiative in December aimed at boosting local manufacturing. The first part gave medium-sized factories with annual sales revenues of less than EGP 1 bn access to subsidized loans. The second, meanwhile, required banks to write-off bad loans made to financially-strained factories — starting with loans of up to EGP 10 mn, as a first phase that is in place until the end of the year, and extending to loans exceeding this amount later.