Friday,20 October, 2017
Current issue | Issue 1303, (14 - 20 July 2016)
Friday,20 October, 2017
Issue 1303, (14 - 20 July 2016)

Ahram Weekly

New card restrictions

LAST month the Central Bank of Egypt (CBE) sent shockwaves through the country when an official letter seen by the Reuters news agency showed that the CBE had ordered a ban on the use of debit cards abroad linked to local currency accounts, reports Nesma Nowar.

Al-Ahram Weekly

However, CBE governor Tarek Amer denied that the ban had been issued and said that there was no change to the rules on using debit cards abroad. It was up to individual banks to set limits on client usage, he said. The CBE had merely ordered measures to control the use of debit cards in order to stop their use for illegal currency trading purposes, he added.

“It is up to each bank to set limits on its clients’ usage of foreign currency abroad through debit cards linked to local currency accounts, but we need vigilance because some clients use debit cards to access large amounts of dollars not intended for travel, tourism, or shopping purposes,” Amer told the Middle East News Agency (MENA). He added that the banks had the right to impose limits on using local currency debit cards abroad.

The cap on credit or debit card transactions and cash withdrawals varies from one bank to another. In general, the banks put a monthly cap of $750 to $1,300 on cash withdrawals using debit cards linked to current or saving accounts.

According to a source at one of Egypt’s private banks, the banks have not been formally informed of any decision to ban the use of debit cards, but limitations on transactions carried out with cards, especially debit cards, were already in place. He said his bank had put a monthly cap of $1,000 on cash withdrawals using debit cards, effectively hindering any illegal currency trading. 

For credit cards, a monthly limit of $7,000 had been put on purchases made using the cards and a $3,000 monthly limit on cash withdrawals. The source said that the caps were also liable to change. “Egyptian consumer behaviour is what prompts the state to issue these regulations. Some people misuse their cards,” he told Al-Ahram Weekly

The current limitations on card transactions and cash withdrawals had been enacted three months ago, he said, adding that before the foreign currency shortage the limitations had not been that strict. “Limitations were associated with individual cases, such as if a client had spent a large amount of money all at once,” the source said.  

Egypt has been suffering from a foreign currency shortage after political instability in recent years has strained its foreign currency earnings. The crisis became graver when tourism receipts fell sharply after the downing of a Russian plane over Sinai last year. 

The country depends on imports for everything from food to fuel, and the CBE has therefore pressed ahead with measures to deal with the foreign currency shortage. In March, it devalued the Egyptian pound by 14 per cent to LE8.78 per US dollar. Though the official exchange rate for the dollar has hovered at around LE8.8 for three months, the dollar now sells at up to LE11 on the black market.

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