Chapter Five: Initiatives for Defaulting Customers

Part One: Initiative for Irregular Customers from Legal Persons

In light of the role played by the Central Bank of Egypt in monitoring economic developments and stimulating various sectors of the Gross Domestic Product, and facilitating efforts to push the production wheel forward, which has a positive impact on irregular customers in repayment, and with the desire to reintroduce them into the economic activity circle, the following initiative has been issued:

1. The initiative applies to legal persons, whether judicial proceedings have been taken against them or not, from customers with doubtful or bad debts (creditworthiness categories 9 and 10), and whose debt balance is less than 10 million EGP.

2. The outstanding debt balance in the bank's books (without accrued interest) as of September 30, 2019.

3. The initiative takes effect from its date until June 30, 2021.

4. If the customer makes cash or in-kind repayment (in case the bank accepts in-kind repayment) of a portion of the debt balance according to their cash flows, and a study prepared for each customer individually to set the appropriate timeline for them, the following shall apply:

   a. Removal from the blacklist in the Central Bank's credit registration system and the Egyptian Credit Information Company (Score I).

   b. The transaction ban does not apply to this debt.

   c. Assignment of all pending and exchanged cases at courts immediately upon the customer's agreement with dealing banks on repayment terms.

   d. Release of all guarantees related to this debt.

Each bank must also take the necessary measures to achieve the objectives of this initiative, including ensuring that customers who meet the above conditions are notified via registered letters in addition to other communication means, while ensuring that the settlement complies with the correct law.

1. Letter from the Governor of the Central Bank of Egypt dated December 12, 2019
2. Letter from the Governor of the Central Bank of Egypt dated January 3, 2021
3. Letter from the Deputy Governor of the Central Bank of Egypt dated February 20, 2020

The following was also emphasized:

1. Refraining from resorting to the courts by filing lawsuits against customers unless fraud by the customers is proven.

2. The necessity of conducting credit studies for customers so that lending is based on sound creditworthiness and relying on project revenues as a source for debt repayment, avoiding excessive reliance on personal guarantees and collateral from customers.

3. Banks shall not obtain cheques as security for facilities and shall be satisfied with obtaining promissory notes.