Cairo on June 8, 2016

Mr.
Chairman of the Board of Directors
Bank

Greetings,

Further to the letter from the Governor of the Central Bank of Egypt dated February 22, 2016, regarding the Central Bank of Egypt's initiative to provide medium and long-term financing to regular medium-sized companies operating in the fields of industry and agriculture at reduced interest rates determined by the Executive Board pursuant to the Board of Directors' decision at its meeting held on February 17, 2016, and referring to item (4) of the aforementioned decision, which tasked the Banking Supervision and Inspection Sector at the Central Bank of Egypt to issue a detailed memorandum containing the procedures and rules for implementing the provisions of this decision, you will find attached these detailed rules and procedures for implementing its provisions.

I take this opportunity to draw your bank's attention to the necessity of making every effort to grant financing to small, medium, and large enterprises and to try to overcome all obstacles facing these companies, with the aim of promoting them and achieving the objectives sought from the initiatives issued by the Central Bank of Egypt in this regard.

Please take the necessary action in this regard.

Accept my highest regards,

Gamal Naguib

The Detailed Rules and Procedures for the Decision of the Board of Directors of the Central Bank of Egypt dated February 17, 2016 regarding the initiative to encourage financing of machinery, equipment, and production lines for regular industrial and agricultural medium-sized companies

Based on item (4) of the aforementioned decision, which tasked the Supervision and Inspection Sector to issue a memorandum containing the rules for implementing the provisions of this decision, we present below the detailed rules and procedures that banks must comply with in this regard:

First: Purpose of the Initiative:

To affirm what was stated in the circular letter dated March 22, 2016, regarding the necessity for banks to ensure that the credit facilities granted to beneficiary companies from the initiative are used for the purposes and fields specified in the credit approval, through the following:

1. The necessity to include in the financing contract signed with the client a commitment to use the financing for the purpose for which it was granted.
2. Not using the granted credit facilities for linking deposits or any other form of savings.
3. The necessity for the banks' credit policy to define the method of continuous monitoring for the purpose of using what is withdrawn from the facility.

Second: Implementation and Monitoring Mechanism:

1. Establishing an Information Management System (MIS) that provides financial and supervisory reports to serve the purposes of the initiative.
2. Establishing an effective internal control system through coordination between all concerned departments to implement the initiative's mechanism.
3. Allowing banks to use the amount allocated for the initiative on a monthly basis after disbursement, so that each bank conducts the necessary credit study according to its policy and obtains credit approvals for companies, fulfills all conditions, guarantees, and documents, and ensures that the company has not received financing from another bank under the initiative.
4. When banks report the value of loans to the General Administration for Aggregating Credit Risks at the Central Bank of Egypt and the Egyptian Company for Credit Information, it is necessary to separate initiative customers using codes that will be provided to banks subsequently.

Third: Method and Frequency of Installment Repayment and Interest:

1. An electronic system will be established at the Central Bank of Egypt to monitor that each company benefits from the initiative only once, with a maximum amount of 20 million Egyptian pounds through one bank, so that the system provides real-time information about the company's status since the issuance of the credit approval and the disbursement of the loan for it, with its data registered on the system according to forms that the Central Bank will prepare for this purpose, so that the company's information regarding the receipt of a credit approval from one bank is available instantly to all banks in the Egyptian banking sector. Banks are prohibited from dealing with the company under the initiative from that moment onwards.

Accuracy in the information registered on the system must be observed to ensure the correctness of the reports issued from it.

2. Banks must provide the Central Bank of Egypt with the following on a monthly basis:
   a- The expected repayment schedule for the required amount, due in installments quarterly, on the first working day after the end of each quarter for the repayment schedules (excluding interest) for customers for whom disbursement was made during the relevant quarter. b- Treasury bills deposited on the first working day of each month corresponding to the amount at the end of the quarter, according to the case, 1/3 of the amount disbursed during the month or the used amount, with reference to the rules and procedures followed by the Central Bank of Egypt in repurchase operations used for monetary policy purposes.

3. The value of installments will be automatically deducted from the bank's account on their due dates on a quarterly basis according to the repayment schedules previously provided to the Central Bank of Egypt, regardless of the companies' default or the rescheduling of their debts.

The required amount is aggregated through the actual disbursement registered for companies in the electronic system, and banks are allowed to register on the system throughout the month until the closing date (5 working days before the end of the month).

1. (The first of the months of January, April, July, October)
2. (Used Amount = Net outstanding balance at the end of the quarter + Total new amount required to be disbursed - Quarterly due installments)
3. Subject to a deduction authorization.
4. According to the approval of the Board of Directors of the Central Bank of Egypt at its meeting held on March 23, 2016, the frequency of interest repayment is modified to be monthly (instead of quarterly), due on the first of each month.

4. The margin between the interest rate of the Central Bank of Egypt lending to banks and the final lending rate to customers includes a commission on the highest debit balance, administrative expenses, yields, and other currencies, with the application of tax expenses according to prevailing laws and stamps.

5. In case of the company's default and after conducting the second rescheduling for it, the bank is free to price and apply interest according to its internal policy on the due installments.

In light of the above, the Supervision and Inspection Sector will periodically follow up to verify the extent of banks' compliance with implementing all provisions of the initiative and the quality of the portfolio formed within its scope, and to ensure the correctness of the system statements and those that will be provided to banks in the forms to be provided to banks subsequently.

It is worth noting that the electronic system used in implementing the initiative is very similar to the system applied to the housing finance initiative issued on February 19, 2014, and therefore, experience from those who have previously dealt with the housing finance system in your esteemed bank can be utilized.