Circular dated December 28, 2016 regarding clarifications on monthly income for calculating consumer loan installment values

Dear Sir/Madam, Greetings,

I would like to refer to the decision of the Board of Directors of the Central Bank of Egypt in its meeting held on January 6, 2016, and the instructions issued in the letter of the Deputy Governor dated January 11, 2016, regarding the ratio of the value of due installments to the individual's monthly income concerning the portfolio of loans for consumer purposes, and real estate loans for personal housing. I would like to draw your attention to the fact that, in light of the Central Bank's close monitoring of the application of these instructions, the following has been observed when granting some banks loans to employees for consumer purposes, particularly auto loans:

• Relying solely on the disclosure provided by the customer regarding their monthly income without obtaining documents indicating it, such as (a letter from the employer, a salary statement, the customer's bank statement, etc.).

• Calculating the ratio of the value of due installments to the individual's monthly income at a rate exceeding the prescribed rate according to the instructions issued by the Central Bank of Egypt.

And I would like to emphasize in this regard that:

• The aforementioned disclosure is not considered as proof of the income value, and it is necessary for your bank to obtain documents indicating the monthly income value when granting loans for consumer purposes. In the event that this is not possible for certain occupational categories, it is required to adopt a calculation method for those categories by the Bank's Board of Directors, as stated in the letter of the Deputy Governor dated March 22, 2016, regarding clarifications on these instructions (second item).

• The concept of monthly income when calculating the aforementioned ratio refers to the total income after deducting taxes and social insurance, plus other additional income elements documented.

• Adherence to the prescribed ratios for the value of due installments to the individual's monthly income according to the letters of the Deputy Governor issued on January 11, March 22, and November 27, 2016.

Please be so kind as to alert strictly regarding the need to take the necessary measures to comply with the above.

Accept my highest regards,

Tarek Fayed

Cairo, December 28, 2016