Circular dated January 3, 2021 regarding the initiative to replace vehicles with dual fuel

Dear Sir / Chairman of the Board of Directors, Greetings,

With reference to the Central Bank of Egypt's tendency to support the state in achieving sustainable development goals, which includes considering environmental and social elements, and in light of the state's tendency to replace vehicles operating on fuel with those operating on dual fuel and urge citizens to take this step by providing the necessary financing for them at low interest rates, the Board of Directors of the Central Bank of Egypt, in its meeting held on December 27, 2020, approved the following decision:

1. Issue an initiative through which an amount of 15 billion Egyptian Pounds is made available by banks at an interest rate of 3%.
   (Fixed interest rate used to grant loans to individuals wishing to replace vehicles (owners, taxis, minibuses) to operate on dual fuel.

2. The loan term ranges from 7 to 10 years, and repayment is made in equal monthly installments.

3. Compensation for banks for the difference in interest rate is calculated as follows:
   Credit and Discount Rate (currently 8.75%) + 2% - 3% Fixed Interest Rate

4. Compensation for the difference in interest rate is provided on a monthly basis according to a letter addressed to the Central Operations Sector of the Central Bank.

5. The interest rate includes all expenses and commissions, except for credit risk guarantee expenses, insurance expenses for vehicles or individuals, and taxes and stamps expenses according to current laws.

6. The scrap value of old vehicles is considered as a minimum down payment for the purchase of new dual-fuel vehicles.

7. Individuals benefiting from the vehicle replacement initiative are exempt from the percentage of loans granted to individuals for consumer purposes to their monthly income issued by the Circular Letter dated December 19,
   2019.

8. No early repayment commission is deducted, in order to encourage individuals to repay loans before their due date.

9. The Central Bank will issue a commitment worth 15 billion Egyptian Pounds - in tranches - in favor of the Credit Risk Guarantee Company as a umbrella to guarantee the guarantee balances issued by the Company in favor of banks, with the Company covering 80% of the risks associated with financing individuals within the initiative under this commitment, and banks bearing the remaining 20%. In the same context, coordination will be carried out with the concerned parties to announce:
   -1 Sales outlets for these cars, which commit to the required technical specifications in coordination with the Ministry of Trade and Industry.

-2 The executive steps that must be taken to include financing in the initiative once the coordination steps with all parties are completed.

This is while ensuring that banks issue electronic cards for customers who obtained loans under this initiative to be used in paying their due installments, in order to encourage them to use electronic tools and reduce pressure on bank branches.

Please accept our highest respect,

Tarek Amer