; PATER EFILATN COMMERCIAL BANK OF ETHIOPIA INTER DEPARTMENTAL MEMORANDUM Date: | September 02, 2022 To: | > Executive VP- Branch and Retail Banking > All VPs > All Regional VPs > Chi staff From: | The President CC: | Board- secretariat Subject: | Amendment of Staff Loans It is recalled that CBE has been providing different types of staff loans for the employees as one of the motivational packages. However, some of the privileges were previously suspended or amended by different memos due to various reasons. Currently, it is found imperative to amend the aforementioned memos and some other procedural provisions of Credit Business Procedure (Volume II). Hence, please be advised that some articles on the Credit Business Procedure (Volume II) and related memos are amended as per the attached document for effective implementation. Please also note that, except for the attached procedural amendments, all the remaining stipulations in the Credit Business Procedure (Volume II) and other related memos issued at different times will remain intact. Amendments on Credit Business Procedure (Volume Il) and other related memosAmendments on Credit Business Procedure (volume II) and other Related Memos 1. General Condition for Staff Loans 1.1. All loans availed for the staff shall be subjected to the Bank’s liquidity position and disbursement allocation plan. Hence, Staff requests for consumer loans and disbursements may temporarily be restricted considering the available fund for lending; 1.2. In the case of loanable fund shortage, the least benefited employee shall have priority for loan processing; 1.3. As far as the employee’s half salary is capable for loan repayment, an employee is eligible for multiple staff loan requests at a time. 1.4. To be eligible for staff mortgage, automobile and personal loan, an employee shall serve the bank at list for one year. 2. Specific Condition for Staff Loans 2.1. An eligible employee can secure staff mortgage, personal and automobile loan two times. The second loan request can be considered without the full settlement of the first staff loan granted for the staff member/s/ if the staff has repayment capacity. 2.2. Moreover, an employee who served the bank above ten years is eligible for unlimited mortgage, personal and automobile loan requests. 3. Staff mortgage, personal and automobile loans are amended as follows. 3.1. Staff Mortgage Loan 3.1.1.Considering staff member increment of his/her borrowing capacity, for every mortgage loan, the Bank may grant incremental loan only two times to complete unfinished works of the already purchased/constructed building or to construct additional building within the compound of the already Page 1 of 4; purchased/constructed building as per estimation made by the Bank’s collateral valuator; 3.1.2.Considering the current inflation rate, if the incremental loan amount is less than Birr 500,000, it shall be disbursed at once; 3.1.3.If a staff had been granted staff mortgage loan and the house is destroyed by fire accident or the house is demolished by government for development programs, and the loan is settled by insurance coverage or by government compensation, the staff shall be eligible to take Staff Mortgage Loan as replacement of staff mortgage loan as afresh (the replacement loan shall not be considered as additional mortgage request); 3.1.4.Staff mortgage loan shall not be provided for the purchase of a residential house in the staff’s/spouse’s parents. The lending units shall receive undertaking letter from the staff that assures same. 3.2. Personal Loan 3.2.1.The maximum amount of staff personal loan shall be 100% of the estimation value of the building held as collateral and depending on his/her borrowing capacity; 3.2.2.A staff that has mortgage loan shall be eligible for personal loan by re-estimation of the same building. The existing mortgage loan shall be settled from the proceeds of the personal loan. 3.3. Automobile Loan 3.3.1.The applicant shall make an equity contribution of at least 10% of the total cost of the automobile; 3.3.2.If the employee or his/her spouse is handicap and has duty free privilege as per the Ministry of Finance and Economic Development directive no. 41/2007, the staff will be eligible for automobile loan financing by pledging the vehicle in his/her name or his/her spouse as collateral. However, the applicant shall bring a letter of consent from Ethiopia evenue & Page 2 of 4Customs Authority about the vehicle to be held as collateral with clearly specifying the tax amount; 3.3.3.If a staff had been granted automobile loan and the vehicle faced accident of total damage, he/she shall be eligible for replacement automobile loan as afresh after full settlement of the outstanding loan from the proceeds of insurance claim; 3.4. Settlement of Employee Salary Advance and Credit Association loan outstanding balance from the proceeds of staff mortgage, personal and automobile loan is allowed, if the staff has additional repayment capacity; 3.5. In addition, to the existing Revolving Employee Salary Advance benefit, an employee can be eligible for Special Staff Loan (SSL) to meet his/her immediate financial need with a maximum of his/her six months’ salary with the following conditions. 3.5.1.To be eligible for SSL the staff shall serve the Bank at least for five years; 3.5.2.The maximum repayment period of SSL shall be five years; 3.5.3.SSL shall be subject to an interest rate equivalent to the Banks prevailing saving rate; 3.5.4.The staff shall present acceptable collateral either of i. Residential building/automobile; ji. Residential building/automobile already pledged for staff Mortgage/personal and staff automobile loans; iii, Personal guarantee from a permanent staff of CBE. Along with, the personal guarantee’s half basic salary shall be sufficient to cover the required monthly loan repayment of the pledged staff. 3.6. For more than one requests of each mortgage, personal and automobile loan, the loan request of the staff shall be subjected to processing and collateral valuation fee as per the Bank's terms and tariff. However, the sum of processing and collateral valuation fee, in any case, shall not be more than 10,000 biry Page 3 of 43.7. Staff mortgage loan request, for employee of the bank awarded with condominium apartment by Addis Ababa City Government or Dire Dawa City Administration or Regional G nments, shall not be subjected to any processing fee. Page dof 4