Chapter Eight: Measures of the Central Bank of Egypt to Limit the Repercussions of the New Corona Virus

First: Reduction of interest rates to stimulate economic growth for the period from March 2019 to December 2021

• In light of global developments and conditions, and with the aim of moving to preserve the gains achieved by the Egyptian economy since the launch of the National Economic Reform Program, the Monetary Policy Committee decided to reduce the basic interest rates at the Central Bank of Egypt by 300 basis points, making the deposit and lending rates for overnight and the main operation rate at levels of 9.25%, 10.25%, and 9.75% respectively, and the credit and discount rate at 9.75%, as an exceptional measure to support economic activity across all its sectors.

• The rates were reduced twice consecutively in September and November 2020, making the deposit and lending rates for overnight and the main operation rate to 8.25%, 9.25%, and 8.75% respectively, and the credit and discount rate at 8.75%.

Second: Deferral of all credit maturities for customers from institutions, small and medium-sized enterprises, and individuals 1:

• In light of monitoring the conditions and developments of the banking market, it was decided that banks should defer all credit maturities (all amounts due for all credit facilities, whether short-term facilities or installments of current or future loans, in addition to returns) for customers from institutions and individuals (whether regular or irregular individuals and institutions, including leasing companies, real estate financing companies, investment companies, and small and medium-sized enterprises, covering maturities of facilities granted with all types of guarantees, as well as customers of initiatives issued by the Central Bank of Egypt). This includes loans for consumer goods (personal loans, credit cards, and loans for purchasing cars for personal use, and residential real estate loans for personal housing), without notifying customers of any available options, so that all customer maturities are deferred and repayment schedules are automatically postponed from the date of issuance of the instructions for a period of six months, without applying additional returns or penalties for delay in repayment. Only the interest rate applied to loans is calculated according to the agreed adjustment mechanism prior to the issuance of the instructions, with the customer being informed of the additional cost they will bear resulting from the deferral.

• The instructions do not apply to new credit facilities granted from the date of issuance of the instructions.

• In case the customer does not wish to benefit from the deferral or bear any additional cost resulting from it, they are free to request it.

• It is required to capitalize the value of returns on the facility, to be paid from the maturities during the new facility period, in proportion to the customer's ability to repay, during the deferral period (lasting 6 months) on the remaining amount of the facility.

• Reaffirming that customers are not required to pay the deferred return value from any maturities after the deferral period.

• In light of inquiries received by the Central Bank of Egypt regarding the implementation of these instructions, the Central Bank of Egypt issued all inquiries that were communicated to the Central Bank of Egypt and the answers to them (Attached No. 1), with the aim of unifying the implementation mechanism 3 in all banks of the banking sector.

• And given the expiration of the credit maturity deferral period during the month of September 2020, and in light of the Central Bank of Egypt's monitoring of economic conditions and its efforts to stabilize the banking sector, and to continue supporting customers whose cash flows were affected during the current crisis, banks were obliged to do the following: 4

  • Each bank must conduct a precise review of existing credit facilities and study the status of all customers and their future cash flows, with the aim of determining the appropriate procedures to be taken to deal with them, in accordance with their ability to repay, without representing pressure on the liquidity of companies enabling them to continue their operations, as well as affected individuals negatively.
  • Banks must restructure customers' debts with the aim of reaching a new structure for credit facilities that is compatible with their current repayment ability, giving special attention to customers whose conditions were affected during that period, to be done through one of the following options, by way of example and not exclusively:
    • Increasing the duration of credit facilities.
    • Restructuring due installments without calculating any penalties.
    • Capitalizing the value of returns.
    • Granting a grace period for companies in light of the nature of their activities and future cash flows, without affecting their liquidity.

• It is necessary to comply with the instructions issued regarding the methodology for evaluating the credit quality of customers and forming provisions issued by a decision of the Board of Directors of the Central Bank of Egypt in its session on May 24, 2005, as well as the instructions issued on February 26, 2019 regarding the implementation of International Financial Reporting Standard (IFRS) 9.

• Taking into consideration that in case of restructuring the debt and resuming repayment - without the existence of financial penalties on the customer - this is not considered an indicator of a significant increase in credit risk.

• It is necessary for each bank to study and defer the total risks facing the current crisis, and conduct stress tests to determine the impact of the crisis on the credit portfolio, as well as on different economic sectors, and formulate plans to deal with any potential losses.

Third: Measures to limit cash transactions and facilitate the use of electronic payment methods and tools 5:

• Issuing electronic wallets free of charge.

• Applying the following pricing policy on transfer services for natural persons only through mobile phone wallets:

  • Exempting all customers from transfer fees for two transactions per month from any mobile phone wallet to any other mobile phone wallet.
  • Setting a maximum pricing of 1 (one Egyptian Pound) per transaction for transfers made between any mobile phone wallet and any other mobile phone wallet belonging to the same service provider.
  • Setting a transfer commission of a maximum of 0.5% of the transfer value, not exceeding 10 (ten Egyptian Pounds) per transaction, for transfer transactions made between any mobile phone wallet and any other mobile phone wallet not belonging to the same service provider.

• Exempting citizens from all issuance fees for prepaid cards until December 31, 2022, provided that these cards are "Contactless" cards from the date the bank begins issuing this type of card.

3. Regarding Bank Transfers:

• Exempting customers (natural persons only) from all fees and commissions related to all bank transfer services conducted in Egyptian Pounds through electronic channels (Internet, Mobile Banking, and Instant Payment applications) from January 1 to December 31, 2023.

4. Regarding Payment Services Using Contactless Payment Tools: Licensed banks accepting electronic payments are committed to canceling all fees and commissions borne by private sector merchants on transactions conducted using contactless payment tools issued by banks operating in the Arab Republic of Egypt and without entering a PIN, with the issuing bank of the contactless payment tool reimbursing the interchange fees to the acquiring bank during the period from July 1, 2022, to December 31, 2022.

5. Regarding the initiative to increase the number of Micro, Small, and Medium Enterprises (MSMEs) wishing to activate E-Commerce collection services from private sector merchants:

• Banks must provide a dedicated electronic wallet for MSMEs by December 20, 2022.
• Banks must activate the payment service using the Unified QR Code and the "Pay to Request" service for all merchants dealing with POS terminals, and provide necessary usage instructions, and inform customers.

6. Regarding Cash Withdrawal Transactions from ATMs: The following will be applied during the period from July 1, 2022, to December 31, 2022:

• The maximum commission for a cash withdrawal transaction from ATMs of cards issued by other banks is 5 (five Egyptian Pounds) only.
• Increasing the limit for cash withdrawal per transaction from ATMs belonging to other banks to 4,000 Egyptian Pounds (four thousand Egyptian Pounds).
• And, in light of the Central Bank of Egypt's monitoring and daily observation of transaction movements with banks, the following was decided:
  • Setting a daily maximum limit for withdrawal transactions at bank branches at 250,000 Egyptian Pounds for individuals and companies.
  • Setting a daily maximum limit for withdrawal transactions from ATMs at 30,000 Egyptian Pounds.
• It was also emphasized that it is necessary to take what is required to ensure the operational efficiency of the ATM system, as well as refilling machines with cash continuously during salary and pension payment periods, in addition to the banks' continued cleaning and disinfection of all machines periodically.
• Reaffirming the review of the bank's internal policy to update the limits mentioned above, with updating the policy on maximum limits for cash withdrawal for foreign currencies placed by the bank and approved by the Board of Directors, and updating it periodically.

Fourth: Modification of the interest rate applicable to Central Bank initiatives 10

-1 In light of the decisions issued by the Monetary Policy Committee to reduce the basic interest rates at the Central Bank, the interest rate applied to the following initiatives was modified to become 8% (calculated on a declining basis) instead of 10%:

• The Real Estate Financing Initiative for Middle-Income Groups.
• The Private Sector Industrial, Agricultural, and Contracting Sector Initiative.
• The Tourism Sector Support Initiative for financing the construction and renovation of accommodation hotels, floating hotels, and tourist boat fleets, and financing working capital and salaries.

-2 Banks will be compensated for the difference in interest rate and the compensation cycle mentioned in these initiatives, according to the following mechanism: Discount and Credit Rate + 2% - 8%

-3 Reaffirming the continuation of the rest of the initiative conditions without modification.

-4 Modifying the interest rate applied to customers who previously benefited from these initiatives to the new interest rate, effective from the date of modification.

And according to the decision of Dr. the Head of the Council of Ministers No. 4151 of 2022 issued on November 19, which included the mechanism of dealing with initiatives only (which banks are compensated for the difference in interest rate over the prevailing loan rate), and the interest rate applied to them, and the compensation mechanism and cycle, the following will be done: -1 The Real Estate Financing Initiative for Middle-Income Groups: The Ministry of Housing, Utilities, and Urban Communities will compensate banks for the difference in the interest rate applicable to the initiative using the mechanism mentioned in the decision. -2 The Private Sector Industrial, Agricultural, and Contracting Sector Initiative: Financing or new use under the Private Sector Industrial, Agricultural, and Contracting Sector initiative at an interest rate of 8% has been stopped, and the utilized balance from the granted facilities will be paid off gradually according to the facilities' schedule. -3 The Tourism Sector Support Initiative for financing the construction and renovation of accommodation hotels, floating hotels, and tourist boat fleets, and financing working capital and salaries: The interest rate applied was modified to become 11%, and the Tourism and Antiquities Support Fund or the Ministry of Tourism and Antiquities will compensate banks for the difference in the interest rate applicable to the initiative using the mechanism mentioned in the decision.

Fifth: Participation in bank board of directors meetings via video or phone 12:

With the aim of enabling banks to perform their duties in the best possible manner under exceptional circumstances, the Central Bank of Egypt allowed the following exceptions regarding the instructions issued on January 29, 2019, concerning the frequency of holding board of directors meetings and the number of participations via phone or video, until the end of December 2022:

• No compliance with the maximum limit for the number of participations of one board member via video or phone.
• No requirement for all board members to attend in person.
• Obtaining prior approval from the Supervision and Monitoring Sector at the Central Bank regarding what is submitted.

Sixth: Application of the International Financial Reporting Standard (IFRS 9) in light of the current crisis 13:

The Egyptian Accounting Standard No. 30 permits banks to issue annual abbreviated financial statements according to the amendments for the year 2015 (Periodic Financial Statements), with the commitment to prepare full annual financial statements by the end of December 2020 for banks that prepare their annual financial statements at the end of December of each year, and by the end of June 2021 for banks that prepare their financial statements at the end of June of each year.

Regarding the period of deferral of credit maturities for customers for 6 months issued pursuant to the circular letter dated March 15, 2020, and the subsequent circular letter mentioned above, this period should be excluded when calculating the default period and should not be considered an indicator of a significant increase in credit risk, without prejudice to the bank's responsibility to evaluate its credit portfolio to maintain its quality and evaluate its customers' ability to repay.

Seventh: Business Continuity and Emergency Plans for Banks

Consistent with the state's direction in confronting the new Corona virus and securing the banking sector, and with the aim of ensuring that banks carry out their various activities and operations with efficiency, as well as fulfilling their role in supporting and assisting all sectors of the national economy, the Central Bank of Egypt deemed it necessary during the crisis for banks to take the necessary precautionary and preventive measures to ensure the continuity of operations and provide customers' banking needs, as follows:

A. Ensuring Business Continuity and Emergency Plans for Banks, with measures including at least the following:

1. Preventive Measures:

• Raising awareness among bank employees.
• Providing disinfectants and establishing a mechanism for continuous disinfection and sterilization, and fumigating banknote vaults.
• Enhancing the use of technology as an alternative to meetings (video or phone calls, etc.).
• Requiring employees to report their locations during travel outside the country, and obtaining mandatory leave upon return.
• Expanding the use of electronic means in document exchange inside and outside the bank (virtual mail, email, etc.).
• Providing devices and equipment for early detection of the virus.

2. Notifying the Office Supervision Sector at the Central Bank of the business continuity plan within a maximum of one working day from the date of the instructions, which must include the following:

• Identifying the management and responsible person for implementing the plan.
• Locations used to restore data, information, systems, and alternative premises to practice activities when normal practice is impossible.
• Plans for hedging procedures to avoid the spread of infection, especially upon confirmation or suspicion of an employee's infection.
• Availability of technological infrastructure ensuring the bank's ability to provide banking services.

B. Facilitating Access to Banking Services:

• Banks must immediately make available the necessary credit limits to meet the financing of operations for basic and strategic goods, ensuring the fulfillment of requests from importing companies, particularly food goods to cover market needs.
• Making available the necessary credit limits to finance working capital, especially paying employees' salaries in companies.
• Studying and monitoring the most affected sectors.
• Formulating urgent plans to increase credit limits with external banks to ensure the continued provision of necessary financing for foreign trade operations.

C. Banking Operations:

• Continuation of work at bank contact centers to respond to customer inquiries.
• Immediate refilling of ATMs and conducting periodic maintenance, and communicating with cash transportation companies to ensure operational continuity.
• Retaining customer deposits to form large reserves of banknotes at their branch network and cash center.
• Working on replacing large cash withdrawals with transfers or bank checks, exempting customers from banking fees resulting from this.
• Encouraging customers to conduct banking transactions through electronic channels and cards instead of cash transactions.

The Central Bank of Egypt emphasizes its monitoring of conditions and developments at the local and international levels to intervene immediately by taking any necessary measures to maintain monetary and banking stability.

D. Regarding Payment Services Using Mobile Phones 15: Banks are permitted, as an exceptional measure until June 30, 2020, to apply customer identification procedures electronically according to the following for new bank customers:

• Identifying the customer's identity by any electronic means the bank deems appropriate, including but not limited to, obtaining their national ID number and mobile phone number electronically.
• The bank must verify the customer's ownership of the mobile phone number used in the registration process through the dedicated platform for this purpose.

The maximum limits - in Egyptian Pounds - for payment services using mobile phones are as follows:

	Customers who did not perform the required due diligence on payment services using mobile phones issued in March 2019 (a) Natural persons
	Daily Limits	Monthly Limits	Limits determined by the bank
	30,000	100,000
	Customers who are legal persons
	40,000	200,000	Limits determined by the bank
	Existing bank customers who were identified electronically
	30,000	100,000	Limits determined by the bank
	New bank customers who were identified electronically	30,000	30,000

The customer is required to complete what is necessary to comply with the due diligence procedures for payment services using mobile phones "issued in March 2019" within three months from the date of account opening, and the bank must close the account if the procedures mentioned are not completed within the specified period, while enabling the customer to withdraw any due balance after closing the account.

E. Regarding Banking Cards

The maximum limits - in Egyptian Pounds - and contained in the clause issued in May 2019 regarding the rules governing payment services using prepaid cards are modified to become as follows:

Limit	Nature of Customer	Daily Limits	Monthly Limits	Limits determined by the bank
	Customers who did not perform the required due diligence on payment services using prepaid cards issued in March 2019 (a) Natural persons	30,000	100,000
	Legal persons	40,000	200,000	Limits determined by the bank

-1 Regarding contactless payment tools and acceptance means, the maximum limit for a single transaction that does not require entering a PIN "Go & Tap" and contained in clause 4 of "Contactless Electronic Payment Issuance and Acceptance Standards" issued in May 2019 is raised from 300 Egyptian Pounds to 600 Egyptian Pounds.

-2 Regarding electronic collection, banks licensed for electronic acceptance services must do the following: 1-1 Activate the payment service using the Unified QR Code and the "Pay to Request" service for all merchants dealing with POS terminals, and provide necessary usage instructions, and inform customers.

---

[RegAlert note: the English text above is a translation of the first 24,000 characters of a 154,255-character original (16% of the document). The remainder was not translated. The complete original-language text is stored with this document.]