Praised by international financial organizations, the Egyptian banking sector is often portrayed as a crisis survivor. It is true that the sector managed to withstand the financial tsunami for over a year; however, bureaucracy, rigidity, and centralization were equally instrumental in this so-called victory.
This year can be labelled the ‘Year of the Fat Cats’ Return’. Individuals previously accused of fraud—crimes officially acknowledged in the past—are now making a comeback through bank settlements. These arrangements fail to recover depositors’ rights or secure sufficient liquid assets to offset the losses incurred.
In contrast, despite official rhetoric championing support for small investors and Small and Medium Enterprises (SMEs), Egypt’s banking policies remain indirectly hostile to these groups.
Critics argue that the government’s recent initiative to establish microcredit companies is merely a rehash of a previous scheme by the Agricultural Credit and Development Bank, which left numerous Egyptian farmers imprisoned. High interest rates led to widespread repayment failures, perpetuating a cycle of financial hardship.
Meanwhile, judges, lawyers, police officers, and journalists are now among the victims of credit injustice. Many banks have adopted precautionary measures, denying credit access to individuals in these professions. This discriminatory behaviour is exemplified by the unofficial adoption of so-called ‘restricted professions’ lists.
The practice of categorizing ‘restricted professions’ has become common among private banks, largely due to their ‘bad credit history’ with clients in these fields. Despite its prevalence, heads of retail banking departments are unwilling to provide details or be quoted on the matter. Most justify the practice by citing past difficulties with clients from these professional groups.
A credit retail director stated, ‘Any bank has the freedom to ban a certain group from accessing credit based on delayed judicial procedures in cases of repayment failure.’ Another explained that the only exception for clients from these groups to secure loans is through direct approval from branch managers.
Banks are currently maintaining a sharp focus on applicants seeking car, real estate, or personal loans. Diplomatic rejections are often issued, driven by the secret restriction policy, regardless of an applicant’s income credibility, which should logically serve as the basis for fair judgement.
This practice contradicts standard procedures for individuals who are not blacklisted by the Central Bank of Egypt or I-Score (the Egyptian Credit Bureau), which provide credit history data to financial institutions.
Mr. Mohamed al-Sharawy, a lawyer with the Africa and Middle East Refugee Assistance (AMERA) organisation, commented, ‘It is a discriminatory action that unfairly restricts credit services to specific social groups. At the same time, this constitutes illegal behaviour.’
The Journalists’ Syndicate, represented by Mr. Mohamed Kharaga, head of its economic committee, has been negotiating with the Central Bank of Egypt and the presidents of several banks to remove journalism from these undeclared restricted lists.
Kharaga stated, ‘The issue is ongoing, and we have submitted a request to the president of Al Ahly Bank, but there have been no results so far.’
It is widely acknowledged among bankers that individuals in the aforementioned professions are often perceived as using their influence to obstruct creditors when legal action is pursued in cases of repayment failure. The actions of a minority have, unfortunately, resulted in a collective discriminatory policy that unfairly targets a much larger group of citizens.
Mr. Ahmed Qura, former president of the National Bank of Egypt, denies the existence of such policies or restricted professions’ lists. ‘Neither the Central Bank nor the government has issued any such instructions,’ Qura stated.
He further described these practices as illegal if they are taking place, emphasising that no directives have been issued by the Central Bank on this matter so far. Nevertheless, he justified the concerns of bankers towards these clients, calling it ‘a fear of evils.’ He explained, ‘Banks have the right to take precautionary steps out of fear. Banks sometimes face difficulties enforcing court rulings against police officers, especially when they are transferred to new departments that refuse to accept responsibility.’
This situation exacerbates the confusion within Egypt’s banking sector and increases the already significant number of citizens excluded from credit services. Meanwhile, disproportionate amounts of credit continue to be extended to other investors who often wield enough power over banks to negotiate favourable terms, even after committing fraud, in the absence of robust commercial law enforcement.
Another version of this article is published by Daily News Egypt.