Circular dated February 16, 2020 regarding amending the ratio of real estate financing to the total loan portfolio

Cairo on: 16 February 2020

Dear Mr. Chairman,

Greetings,

With reference to the circular letter issued on 13 March 2002 (attached), permitting all banks to engage in the activity of financing investment in the fields of purchasing, building, renovating, or improving residential units, administrative units, service facilities, and buildings dedicated to commercial activity, including financing provided to real estate financing companies, in accordance with the provisions of the Real Estate Financing Law issued by Law No. 148 of 2001 and its executive regulations, under conditions including:

1. Matching the maturities of the bank's resources with the maturities of lending for real estate financing purposes.
2. Observing sound banking controls and rules in the field of granting credit.
3. The loans granted by the bank for real estate financing in accordance with the provisions of the Real Estate Financing Law shall not exceed 5% of the bank's total loan portfolio, and this limit shall not apply to the Arab African International Bank and the Housing and Development Bank.

In light of the issuance of a new initiative on 19 December 2019, under which an amount of 50 billion Egyptian pounds is allocated for real estate financing targeting middle-income customers, and since the growth of the real estate sector contributes to the continuity of the economy in economic indicators, the Board of Directors of the Central Bank decided in its meeting held on 26 January 2020 to increase the aforementioned ratio to ensure the absorption of the expected increase in the volume of real estate financing, as follows:

1. Amendment of Item No. 3 of the circular letter issued on 13 March 2002 regarding the ratio of real estate financing to the bank's total loan portfolio to become: "The loans granted by the bank for real estate financing in accordance with the provisions of the Real Estate Financing Law shall not exceed 10% of the bank's total loan portfolio, and this limit shall not apply to the Arab African International Bank and the Housing and Development Bank."

I would like to confirm the continued application of the remaining items of the aforementioned circular letter.

Please take the necessary action to implement the mentioned decision from its date.

Yours faithfully,
Gamal Naguib

Greetings,

When replying, please mention the circular letter number 2/87/310 Subject: Rules for banks practicing real estate financing activities in accordance with the provisions of Law No. 148 of 2001 Cairo on:

Dear Mr. Chairman,

I would like to refer to what Article Three of Law No. 148 of 2001 issuing the Real Estate Financing Law stipulates, that banks registered with the Central Bank of Egypt are permitted to practice the activity of real estate financing according to the rules determined by the Central Bank of Egypt. We kindly request you to be informed that the Board of Directors of the Central Bank of Egypt, in its meeting held on 28 February 2002, decided the following:

"Permitting all banks registered with the Central Bank of Egypt to engage in the activity of financing investment in the fields of purchasing, building, renovating, or improving residential units, administrative units, service facilities, and buildings dedicated to commercial activity, including financing provided to real estate financing companies, in accordance with the provisions of the Real Estate Financing Law issued by Law No. 148 of 2001 and its executive regulations, under the following conditions:

1. Matching the maturities of the bank's resources with the maturities of lending for real estate financing purposes.
2. Observing sound banking controls and rules in the field of granting credit.
3. The loans granted by the bank for real estate financing in accordance with the provisions of the Real Estate Financing Law shall not exceed 5% of the bank's total loan portfolio, and this limit shall not apply to the Arab African International Bank and the Housing and Development Bank.

The Banking Supervision Department

The Bank Supervision Department

The bank shall submit to the Central Bank of Egypt a quarterly statement of real estate financing in accordance with the provisions of the aforementioned law and its ratio to the bank's total loan portfolio, in application of the aforementioned rules.

Please be informed and notified to take the necessary action regarding the completion of the attached statement on a quarterly basis starting from the center at the end of June 2002, in addition to the data currently submitted to the Banking Supervision Department regarding real estate financing, which is not subject to the provisions of Law No. 148 of 2001.

All this data must be submitted within a deadline of the tenth day of the month following the month for which the statement is prepared.

Yours faithfully,
Deputy Governor
Board of Directors"