Dear Sir,
Bank

Greetings,

I would like to refer to the rules governing the credit registration system at the Central Bank of Egypt issued by its Board of Directors resolution in its meeting held on April 26, 2005, particularly regarding categories of non-compliant customers, including categories that prohibit granting credit to them and the exceptions provided for lifting this ban in some cases, as well as the rules for listing on negative lists.

In this regard, the Central Bank of Egypt has moved to amend some provisions of the aforementioned resolution to keep pace with various changes and conditions of the banking sector and to ensure the provision of accurate and clear credit data about non-compliant customer categories. This is in addition to the necessity of purging current negative lists and establishing fair rules for future listing in these lists, so that banks' transactions with these categories are characterized by the required transparency to achieve the safety of the credit system in the banking sector.

Accordingly, a resolution of the Board of Directors of the Central Bank of Egypt was issued in its meeting held on January 3, 2012 (copy attached) amending some of the rules governing the credit registration system at the Central Bank of Egypt dated April 26, 2005, such that banks are committed to applying these controls from its date, in preparation for sending them to the Central Bank of Egypt immediately upon your receipt of the forms prepared for this purpose, and taking into account the period prescribed alongside some provisions of the resolution, while maintaining the continued validity of the Board's resolution dated April 26, 2005, and subsequent circulars regarding matters for which no new text has been issued.

Please accept our highest respect,

Gamal Nagah
Date: 2012/1/3

Central Bank of Egypt Board of Directors Resolution No. 2012/104 In its meeting held on January 3, 2012 Regarding the amendment of the rules governing the credit registration system at the Central Bank of Egypt Regarding categories of non-compliant customers, including instructions for listing individuals on negative lists, and the basis for dealing with these customers

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After reviewing the Central Bank, Monetary Authority, and Banking Law issued by Law No. 88 of 2003 and its executive regulations,

And the resolution of the Board of Directors of the Central Bank of Egypt dated April 26, 2005, regarding the rules governing the credit registration system at the Central Bank of Egypt and subsequent circulars,

And the approval of the Board of Directors of the Central Bank of Egypt on the memorandum No. 2012/104 presented to the Board in its meeting held on January 3, 2012.

Preamble

The resolution addresses the description of non-compliant customer categories from institutions and individuals obtaining consumer and mortgage loans according to the existing rules regarding the registration of financing balances and credit facilities provided to bank customers operating in the Arab Republic of Egypt at the Central Bank of Egypt (whether declared according to the prescribed limit of 30,000 pounds or more for a single customer or non-compliant customers whose debts have decreased below that limit).

It also addresses regulating the data of individual customers listed on negative lists, whether their obligations are less or more than 30,000 pounds (consumer loans whether in the form of credit cards or for purchasing cars for personal use or personal loans to cover needs for purchasing goods and services, in addition to mortgage loans for personal housing for the purpose of acquiring or renewing housing units). This regulation is achieved by purging current negative lists of cases that should not be included in them, and establishing new bases for listing and dealing with these lists in the future, as detailed below:

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(Article First)

1. Institutional Customers

Non-compliant customers are classified according to creditworthiness assessment and provisioning bases issued by the Central Bank of Egypt, while observing the definitions contained in the Board's resolution issued on April 26, 2005, as follows:

2. First: Categories of Non-Compliant Customers

(1) Customers whose debts were written off without discharge.

Whether they filed lawsuits against the creditor banks or did not.

(2) Customers suspended from payment.

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(3) Customers subject to judicial proceedings filed by the creditor bank, and these proceedings include filing lawsuits / filing criminal cases / reporting to the prosecution / requesting the issuance of a judicial precautionary seizure order or performance order / registering a notice of forfeiture of ownership.

(4) Customers subject to judicial proceedings filed by external entities, including placing the customer's assets under guardianship / prohibiting him from disposing of them / preserving his assets / issuing court judgments for liquidating his affairs / issuing judgments declaring his bankruptcy.

(5) Settlement customers. Settlement refers to the bank -- in the framework of restructuring credit granted to non-compliant customers -- negotiating with its customer and signing an agreement with him that includes waiving part of the bank's entitlements, including accrued interest and commissions, and/or reducing the yield price in the future -- after settlement -- from the credit and discount price.

The settlement takes the ruling of a rescheduling agreement with the customer for more than two times.

(6) Customers subject to amicable liquidation of their affairs resulting in losses for creditor banks.

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(7) Customers subject to amicable liquidation of their affairs that did not result in losses for creditor banks.

Including medium and small institutions.

1. Or the LIBOR used in pricing in the case of credit granted in foreign currency.

2. The suspension period is determined according to each bank's policy or for a period exceeding 180 days, whichever is more conservative.

3. The same categories apply to joint partners and guarantors of non-compliant customers.

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(8) Rescheduling customers. Rescheduling refers to the bank, up to a maximum of two times -- in the framework of restructuring credit granted to a non-compliant customer who faces circumstances beyond his will affecting his ability to meet his obligations on specified dates -- negotiating with his customer and signing an agreement with him modifying the terms of the credit granted to him without waiving any entitlements for the bank at rescheduling, and the yield price in the future -- after rescheduling -- not being less than 5% of the credit and discount price.

(9) Customers subject to preventive bankruptcy settlement -- with the approval of creditors -- after court approval of the settlement, whom creditor banks may have signed settlement or rescheduling agreements with.

Banks must review the data of their customers sent to the Central Bank of Egypt to match the nine categories mentioned above by the end of June 2012, according to the form that the Central Bank of Egypt will prepare for this purpose for banks, while adhering to the following:

(1) Separating rescheduling customer data from settlement customers, and declaring each customer according to their status according to the definition previously stated for both rescheduling and settlement.

(2) Specifying the type and size of the credit subject to rescheduling and the number of rescheduling instances.

(3) Specifying the type and size of the credit subject to write-off without discharge.

(4) Reporting -- on the date the customer settles the remaining obligations according to the settlement agreement -- the amount of entitlements waived to the customer and its percentage of the total entitlements before concluding the settlement.

Second: Customers subject to absolute ban on dealing or dealing within the framework of creditor banks' approval:

(1) Dealing is absolutely prohibited with customers of items (1, 2) / First "black list customers" (customers whose debts were written off without discharge and customers suspended from payment) even in the case of providing a guarantee in the form of cash deposits or any of their various savings accounts or treasury bills or government bonds. This is unless the customer in either case agrees with the creditor banks to conclude a settlement or rescheduling, in which case they will be listed alongside the new item.

Regarding credit granted by non-creditor banks at the time of issuing this decision against the aforementioned guarantees, renewal and/or gradual repayment must not occur according to a specified timeline.

In the case of direct or indirect credit or commercial transactions.

6. Or the LIBOR used in pricing in the case of credit granted in foreign currency.

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(2) Dealing is prohibited with customers of items (3 to 6) / First (customers subject to judicial proceedings, settlements, and amicable liquidation of their affairs resulting in losses for creditor banks) until the completion of payment or the availability of either of the following two conditions:

(a) In the case where a bank obtains written approval from creditor banks to provide financing or credit facilities to support customers to continue their activities.

(b) In the case where creditor banks agree with other banks to provide financing or credit facilities to support customers to continue their activities.

As for cases of granting credit to these customers with cash deposits or any of their various savings accounts or treasury bills or government bonds, it is restricted to creditor banks only. As for existing credit at the time of issuing this decision against these guarantees from other banks, renewal and/or gradual repayment must not occur according to a specified timeline.

Third: Rules for disclosure by the Central Bank of Egypt regarding data of non-compliant customers:

The Central Bank of Egypt makes data of the nine customer categories available for review, and this data remains in the system before payment completion, and provides historical information after payment clarifying the previous payment behavior of customers -- knowing that making this data available is for the purpose of studying the customer's creditworthiness and without applying a ban on dealing with him -- as follows:

(1) For a period of ten years in the case of:

(a) Settlement.

(b) Amicable liquidation of the customer's affairs that resulted in losses for creditor banks.

(c) The customer who concluded a settlement with the bank / creditor banks and completed fulfilling this bank's / banks' rights according to the settlement terms, and this is according to the provisions of the Central Bank, Monetary Authority, and Banking Law issued by Law No. 88 of 2003.

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(a) Amicable liquidation of the customer's affairs that did not result in losses for creditor banks.

(b) Rescheduling.

(c) The customer who concluded a settlement with the bank / creditor banks and completed fulfilling in advance all entitlements of this bank / banks according to the provisions of the Central Bank, Monetary Authority, and Banking Law issued by Law No. 88 of 2003.

Fourth: The same rules (items First, Second, and Third) apply to medium and small institutions whose granted credit to any of them does not exceed one million Egyptian pounds and which are allowed to be provided by banks to the Egyptian Company for Credit Information, this is regarding the basis for banning dealing and the disclosure period after completing payment, except for item (1) / Third, where the disclosure period is only five years instead of ten years.

(Article Second)

Individual Customers Listed on Negative Lists Obtaining loans for consumer and mortgage purposes

First: Purging Current Negative Lists:

Each bank must review the data of customers listed in its knowledge on negative lists by the end of June2012 at the latest to exclude customers whose outstanding balances include accrued expenses, commissions, and interest without withdrawing any funds from the creditor or listed bank, or whose names were incorrectly listed by banks.

Second: Rules for listing individual customers on negative lists from the date of the resolution's entry into force for items (4-1), and by the end of June 2012 at the latest for items (7-5):

Before listing them on negative lists, a registered letter with receipt confirmation must be sent one month before (1) notifying customers with arrears of the listing date.

7. And guarantors and sureties, if any.

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(2) Not activating the use of credit cards, and thus not deducting issuance/renewal card expenses and commissions from customer accounts, except after fulfilling the following:
∗ For issuance: A signed request from the customer, to be signed by him or his legal representative, stating that he has received the card and requested its activation.

∗ For renewal: A signed request stating that the customer has received the card and requested its activation.

(3) Increasing customer awareness by banks regarding negative list listing rules, including including loan application or card issuance requests with the specific listing rules and displaying them clearly.

(4) The necessity of paying attention to the accuracy of information sent by banks to the Central Bank of Egypt and the Egyptian Company for Credit Information regarding negative lists.

(5) Analyzing negative list customer data into the following seven categories:

(a) Customers whose debts were written off without discharge.

(b) Customers suspended from payment after the prescribed grace period.

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(Black list customer)
Provided that the customer has been suspended from payment for a period exceeding 180 days after the prescribed grace period or the due date, depending on the case, and must be notified by a registered letter with receipt confirmation one month before the listing date.

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(c) Customers subject to judicial proceedings filed by the creditor bank.

(d) Customers subject to judicial proceedings filed by external entities.

(e) Settlement customers.

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(f) Rescheduling customers.

(g) Customers with settled obligations.

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(6) The provisions of Article First / Second regarding customers subject to absolute ban or dealing within the framework of creditor banks' approval apply to individual customers on negative lists.

(7) The Egyptian Company for Credit Information is committed to making data of the seven customer categories available for review (from a to g) and this data remains in the Company's system before payment completion, and the Company provides historical information after payment clarifying the previous payment behavior of customers as follows: -

(a) For a period of three years in the case of rescheduling and in the case of customers with settled arrears.

(b) For a period of five years in the case of settlement for customers whose debt balances reach up to one million pounds.

(c) For a period of ten years in the case of settlement for customers whose debt balances exceed one million pounds.

(Article Third)

The provisions of this resolution do not apply to customers of the public banks' initiative (operating in industrial, commercial, and service sectors) announced by the banks: Egyptian National Bank, Egypt, Cairo, and Industrial Development in March 2007.

(Article Fourth)

Banks are committed to applying the rules contained in this resolution from its date, taking into account the period prescribed alongside some provisions of the resolution.

Secretary of the Board of Directors

Ahmed Nashed

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