The new licensing regulations stipulate that digital banks must maintain a minimum issued and paid-up capital of EGP 2 billion ($65 million), the CBE explained
The Central Bank of Egypt (CBE) has issued new rules for licensing, registering, and supervising digital banks, part of the government’s efforts in keeping pace with global developments within the financial technology industry (FinTech) and support the country’s transformation into a digital economy.
Digital banks are companies offering banking services through digital channels or platforms using technology, which include certain transaction functions that are provided by traditional banks completed within the regular banking system, as defined by the CBE in its Banking System Law #194.
Digital banks provide all their services via the Internet only and include some of the transaction functions of the basic banking system provided by all traditional banks.
The new licensing regulations stipulate that digital banks must maintain a minimum issued and paid-up capital of EGP 2 billion ($65 million), the CBE explained in an official statement on Wednesday. Digital banks are exempt from this rule when financing large-scale companies.
When financing large companies, digital banks must increase their minimum capital to EGP 4 billion. The CBE added that the majority shareholder must also be a financial institution with a previous business operating similar activities and hold no less than 30% of the total capital value.
Other licensing requirements included the submission of a detailed feasibility study, which must comprise of target segments and a list of intended products to be offered, as well as strategies and plans associated with cybersecurity and information technology.
The CBE noted that these new guidelines are in line with Egypt’s vision of transitioning into a cashless society, and its efforts to promote financial inclusion and boost the FinTech industry. As part of its efforts, the central bank announced its financial inclusion strategy for 2022/2025 late last year which introduced key objectives and priorities for bolstering financial inclusion in the country.
In an April report, the CBE revealed that Egypt’s financial inclusion efforts have borne fruit, recording a whopping 147% growth between 2016 and 2022, and 64.8% in 2022 alone. Women-owned accounts surged in 2022 by 210% when compared to 2016, reaching 18.3 million.
