Circular dated February 24, 2016 amending the real estate financing initiative for low- and middle-income people

Cairo on: 24 February 2016

Mr. Chairman, Bank

Greetings,

With reference to the Real Estate Financing Initiative for Low- and Middle-Income People issued on 19 February 2014 and subsequent circulars thereto, and in light of the Central Bank's desire to achieve better results for the initiative and motivate banks to raise performance rates, the Central Bank of Egypt deemed it necessary to amend the conditions of the real estate financing initiative, open new marketing channels, and alleviate the burden on banks by involving real estate financing companies directly to work with banks instead of operating under their umbrella.

Therefore, the Executive Board of the Central Bank of Egypt has decided to add new segments to allow a larger number of low- and middle-income individuals to benefit from the initiative, specifically by providing long-term financing at low interest rates and appropriate support according to different income segments as follows:

Segment	Low Income (Unchanged)	Middle Income	Above Average (New Segment)
Final Lending Rate to Client	5%	7%	8%
Maximum Monthly Income	Less than 1,400 EGP<br>(Determined by the Real Estate Fund)	8,000 EGP per individual and 10,000 EGP per family	15,000 EGP per individual and 20,000 EGP per family
Maximum Price of Financed Unit	Determined by the Real Estate Fund	500,000 EGP	950,000 EGP

Furthermore, the Board of Directors of the Central Bank of Egypt, in its meeting held on 17 February 2016, decided to amend certain conditions of the Real Estate Financing Initiative for Low- and Middle-Income People issued on 19 February 2014 as follows:

1. Addition of a new customer segment named "Above Average," where the maximum monthly income is 15,000 Egyptian Pounds per individual and 20,000 Egyptian Pounds per family, and the price of the financed unit for this segment shall not exceed 950,000 Egyptian Pounds.

2. Allowing banks to cover credit risks for categories that find it difficult to obtain proof of income through collective insurance policies, provided that the client bears this cost.

3. Repeal of Clause (4)-(a), which stated: "The maximum financing limit for companies shall be 20% of the existing portfolio value in the bank within the framework of the initiative."

4. Amendment of Clause (5) to read: "Permission is granted to sell the portfolios of banks or emerging real estate financing companies under the umbrella of the initiative."

5. Considering the maintenance deposit for the low-income segment as part of the financing, repayable over the same period and at the same interest rate specific to the initiative, provided that the Social Housing Fund deposits such deposit into a special account in the name of the Occupants' Union, managed by the Fund until the establishment of an Occupants' Union for each project/group of units, and the return on the deposit is used to pay maintenance companies to be contracted with.

6. Exempting banks from repaying the value of the subsidy to the Central Bank of Egypt in the event of the borrower's death.

Please accept our highest respect.

Tarek Amer