Life is about to get easier for small businesses that want to go legit
SMART POLICY- Life is about to get easier for small businesses that want to go legit: The Central Bank of Egypt is pushing through procedures that will make it easier for micro-businesses and self-employed folks to open business accounts at the nation’s banks. The changes involve reducing the number and complexity of know your customer (KYC) documents banks have to ask for before they open an account, the CBE said today in a statement (pdf).
What do the guidelines say? The only hard requirements for unbanked micro-businesses, freelancers, and craftsmen are a national ID and a new account application declaring their venture’s line of work. In case the occupation stated on the business or venture owner’s ID doesn’t match the application, the bank would ask for supporting documents including syndicate membership cards, occupational licenses, tax or social security registration, or a letter from the Labour Bureau. Micro-enterprises lacking a commercial registration will also be allowed to submit property ownership or rental contracts for their base of operations, while freelancers and craftsmen would be asked to hand over utility payment receipts to document their place of residence.
State-owned National Bank of Egypt will start opening accounts under the new rules as early as next month, the bank’s head of products and financial inclusion, told Masrawy earlier this week. The bank will impose an EGP 100k monthly limit on accounts set up by self-employed individuals, and an EGP 200k ceiling on micro-enterprise accounts that provide formal documentation.
BACKGROUND: The move comes under new KYC regulations introduced by the CBE last October allowing small businesses and self-employed individuals to open bank accounts by declaring their occupation — a bid to encourage more individuals to join the formal economy, boost financial inclusion, and boost enterprise growth through access to credit.