Chapter Two: Disclosure of the Specifications and Conditions of Retail Banking Products, Yield Rates, and Banking Service Fees

In order to achieve greater transparency for the public dealing with banks and to allow customers to be aware of the specifications of retail banking products and the basis for calculating their cost or yield, registered banks with the Central Bank of Egypt must commit to full disclosure to customers before contracting for the specifications of the offered products and the basis for calculating the costs borne by customers for the purpose of comparing products or the yield rates they will receive based on the situation, and to do so through all means used to inform customers about product specifications, whether published in newspapers or magazines, sent to customers, or displayed upon customer reception at bank branches or otherwise.

Article 56 (t) of the Central Bank, Supervisory Authority and Monetary System Law No. 88 of 2003 stipulates that the Board of Directors of the Central Bank of Egypt shall establish the principles of disclosure and statements to be published and the manner of publication. Article 40 of the same law further stipulates that all bank branches must disclose to customers the yield rates and service fees for the disclosure principles established by the Executive Regulations of this Law, together with the relevant announcements and those published in newspapers and direct correspondence sent to customers.

Article 17 of the aforementioned Executive Regulations stipulates that banks must disclose to their customers the yield rates and service fees for the banking products they offer according to the following:

1. Disclosure must be made in the contract text before contracting with the customer, and within the framework of the bank for the customer regarding the renewal of rates or modification of rates or fees.

2. Disclosure must be made upon customer reception at banks and their branches, or in announcements in newspapers and communication channels for the banking products offered by the bank to customers, or in direct correspondence and publications sent to them.

3. Disclosure must include the Effective Annual Interest Rates for banking products.

1 Circular of the Supervision and Oversight Sector dated January 20, 2002, Circular of the Supervision and Oversight Sector No. 361 dated March 18, 2002 (Decision of the Board of Directors of the Central Bank of Egypt dated February 28, 2002).

2 Letter from the Governor of the Central Bank of Egypt dated July 24, 2003.

In light of the above, banks are required to comply with the provisions of the aforementioned Articles (Article 40 of the Law, Article 17 of the Executive Regulations) regarding the obligation to fully disclose yield rates and banking service fees in the contract text with customers, upon renewal of contracts or modification of rates or fees, and in announcements upon customer reception at banks and their branches, and in communication channels, direct correspondence, and publications sent to customers. It is worth noting that disclosure of the actual annual interest rates applied to products must be such that customers can identify all their features, 3 and main conditions and costs.

It has been emphasized that the need for disclosure of yield rates requires adherence to the principles of public disclosure. 4

In light of the observation that some banks omit the disclosure of some names or administrative systems such as fees and deadlines (e.g., commissions, interest rates, ...) that do not align with those previously approved by the Central Bank of Egypt, which may cause confusion among some customers and does not achieve the required transparency, the opinion was reached at the Central Bank of Egypt of the necessity for the Compliance Management Officer in the bank to review all the names or systems mentioned and to be presented to customers before disclosure in newspapers and various communication channels or upon reception at bank branches or otherwise, to ensure they meet all names approved by the Central Bank of Egypt and the Supervision and Oversight Sector, thereby avoiding negative practices or harmful competition that undermines public disclosure and affects market discipline (Market Discipline). 5

Furthermore, banks must commit to contracting, applying, and disclosing the actual annual interest rates (Effective Annual Interest Rate) for the banking products offered to their customers (deposits, loans, ...). In the case of contracting with entities other than the bank, such as suppliers of goods and services, to finance the purchase of such goods and services by installments, it is necessary in this case that the contract concluded with such entities includes the necessity of contracting, applying, and disclosing the actual interest rates and disclosing them as previously mentioned. It is also prohibited to contract, apply, or disclose at flat rates (Flat Rate) from the bank or suppliers of goods and services. 6

3 Letter from the Deputy Governor of the Central Bank of Egypt dated September 25, 2007. 4 Letter from the Deputy Governor dated July 15, 2012. 5 Circular of the Supervision and Oversight Sector dated April 27, 2010. 6 Decision of the Board of Directors of the Central Bank of Egypt in the session of September 16, 2014.