Privacy Policy

Loan Eligibility: Understanding the Permissions We Need

Hello there,

To expedite the loan disbursal process and assess your eligibility accurately, we require certain permissions from you. Below we outline the specific permissions we require, what information we collect, and how we use it.

SMS Permissions

We collect all of your SMS data but only check messages related to financial transactions. Specifically, we check the name of the sender, the transaction description, and amount to perform a credit risk assessment. Your financial transactions help us create your financial and risk profile, enabling us to provide you with a loan offer. Please note that we do not monitor, read, store, or share any personal SMS data. Only with your explicit consent, we will upload and transmit the SMS content to our secure network environment at https://integration.zimacash.co/

LOCATION Permissions

We collect information about your device's location to assess customer risk and scoring. We will upload your location data to our secure network environment at https://integration.zimacash.co/

DEVICE Permissions

We collect and specific information about your device, including its name, model, region and language settings, identification code, hardware and software information, status, usage habits, and unique device identifiers like IMEI and serial number. This information helps us identify your device and prevent unauthorized devices from acting on your behalf, thereby preventing fraud. We also collect your installed application list to assess your borrowing propensity and debt situation. We will upload this collected data to our secure network environment at

Data Storage

We store all collected information on our secure server at https://integration.zimacash.co/ and do not share it with any third party.

How We Use Your Data

We collect data to provide the Service to you, verify your identity, and create credit scoring models to determine what loans we can offer you. We also use this data for collections and credit reporting purposes.

The data we gather

Upon registering for our service, we will gather your bank and phone numbers, along with video, image, and media content. Additionally, we may obtain your name, age, email address, or other contact details. This data enables us to verify your identity through third-party sources, including the emergency contacts you provide. Furthermore, we will retrieve device-related data to support our credit scoring system. This encompasses details like device manufacturer, model, operating system, installed applications, and unique user identifiers. Moreover, we will access your email and phone contacts, as well as information regarding device usage such as SMS logs and GPS location data. Complementing this, we source information from third parties like credit bureaus and financial institutions. By utilizing our registration service, you consent to the collection and processing of the aforementioned data.

The following Privacy Policy describes how we, Zimacash and its Affiliates, collect, store, use, transfer, disclose and protect your Personal Information.

Please read the following carefully to understand our views and practices regarding your Personal Information and how we will treat it. By downloading the App, you confirm that you have read, understood and accepted the terms of this Privacy Policy set out hereunder. You also consent to the collection, use, storage, processing and disclosure of your Personal Information in the manner set out in this Privacy Policy. This Privacy Policy together with our Terms of Use and any additional terms applies to your use of the System and the Service.

This Privacy Policy includes the following matters:

1. Definition

2. Personal Information which we collect

3. The use of Personal Information which we collect

4. Sharing of Personal Information which we collect

5. Cross-border transfers of Personal Information

6. Retention of Personal Information

7. Access and correction of Personal Information

8. Where we store your Personal Information

9. Security of your Personal Information

10. Changes to this Privacy Policy

11. Language

12. Acknowledgement and consent

13. Marketing and promotional material

14. Third party websites

15. How to contact us

1. DEFINITION

Unless otherwise defined, all capitalised terms used in this Privacy Policy shall have the same meanings ascribed to them in our Terms of Use (as applicable).

2. PERSONAL INFORMATION WHICH WE COLLECT

We collect certain Personal Information about you. The Personal Information which we collect may be provided by you directly (for example, when you opening an Account to use the Service via App, or you otherwise provide Personal Information to us) or by third parties, or be collected automatically when you use the App. We may collect information in various forms and for various purposes (including purposes permitted under Applicable Law).

Information obtained from you or from your Mobile Device directly:

When you register and create an Account with us using the App, you have to provide to us certain Personal Information, including your name, , date of birth, gender, education background, religion, photo, physical address, e-mail address, working information, marital status, emergence contact, your phone number, SIM card details, financial and credit information (including your Mobile Money Account details, bank account details, and bank verification number, where applicable) and an Account ID and/or password that you will use to access the App after registration.

When you use the App, you have to provide to us such relevant information as may reasonably be required by us in order for the App to work. For example, when a payment is made through the electronic money facility within the App, you will provide us information relating to the payment, such as the type of payment card or mobile wallet account used, the name of the issuer of that payment card or mobile wallet account, the name of the account holder for that payment card or mobile wallet account, the number of that payment card or mobile wallet account, and the amount of money paid.

Information collected whenever you use the App or visit our Website:

Whenever you use the App or visit our Website, we may collect certain technical data concerning your usage such as, internet protocol (IP) address, information as webpages previously or subsequently viewed, duration of every visit/session, the internet device identity (ID) or media access control address, and also information regarding the manufacturer, model and operating system of the device that you use to access the App or our Website.

Whenever you use the App or visit our Website, certain information may also be collected on an automated basis using cookies. Cookies are small application files stored on your computer or Mobile Device. We use cookies to track user activity to enhance user interface and experience. Most Mobile Devices and internet browsers support the use of cookies; but you may adjust the settings on your mobile device or internet browser to reject several types of certain cookies or certain specific cookies. Your Mobile Device and/or browser would also enable to you to delete at any time whatever cookies have previously been stored. However, doing so may affect the functionalities available on the App or our Website.

Whenever you use the App through your Mobile Device, we will track and collect your geo-location information in real-time. In some cases, you will be prompted or required to activate the Global Positioning System (GPS) on your Mobile Device to enable us to give you a better experience in using the App.

Meanwhile, your will be required to provide technical information to us while using the App, including the type of Mobile Device you use, a unique device identifier (for example, your mobile device’s IMEI number, the MAC address of your Mobile Device’s wireless network interface, or the mobile phone number used by your Mobile Device), mobile network information, your mobile operating system, the type of mobile browser you use, time zone setting. We will also collect information stored on your Mobile Device, including contact lists, call logs, SMS logs, Facebook and other social media details, contact lists from other social media accounts, photos, videos or other digital content.

We collect all your SMS data but only related to financial transactions. To be specific, we will collect the name of the sender, the description and the amount of transaction to perform credit risk assessment. This enables faster and quicker loan disbursal. No personal SMS data is monitored, read, stored or shared.

We gather all your phonebook contacts which includes their phone contact names, phone numbers, contact added date to augment your credit profile, additionally, this can allow you to choose your references in the loan application or share our app invitation to your friends easily.

We collect your geo-location information when the App is running in the foreground. We endeavour to cease collection of your geo-location information when the App is in the background, but such information may still be collected unintentionally. You can always choose to disable the geo-location tracking information on your Mobile Device temporarily. However, this may affect the functionalities available on the App.

Information collected from third parties:

Due to the nature of the Services which we provide, we are required to work with a number of third parties (including Credit Reference Bureaux, Banks, Mobile Network Providers, collection agencies ,our agents, vendors, suppliers, contractors, partners and any others who provide services to us, perform functions on our behalf, or whom we collaborate with) and we may receive information about you from them. In such cases, we will only collect your Personal Information for or in connection with the purposes for which such third parties are engaged or the purposes of our collaboration with such third parties (as the case may be), provided that we have taken reasonable steps to ensure that such third parties would undertake to us to obtain your consent for the disclosure of your Personal Information to us in line with this Privacy Policy and Applicable Law.

Information about third parties you provide to us:

You may provide us with Personal Information relating to other third-party individuals (such as Personal Information relating to your spouse, family members, friends and emergency contact). You will of course need their consent to do so–see Section 12 “Acknowledgement and Consent”, below, for further information.

3. THE USE OF PERSONAL INFORMATION WHICH WE HAVE COLLECTED

We may use Personal Information collected for any of the following purposes as well as for such other purposes as are permitted by Applicable Law:

a. We may use your Personal Information:

to identify you and to register you as a user and to administer, manage or verify your Account and your credit conditions as such;

to facilitate or enable any checks as we may in our discretion consider necessary before we register you as a user;

to disburse Loan and collect payments for your use of the Service;

to build credit models and perform credit scoring;

to comply with Applicable Law, regulations, and rules, such as those relating to “know-your-customer” and anti-money laundering requirements;

to communicate with you and to send you information in connection with the use of the App;

to notify you of any updates to the App or changes to the Service (including interest rate, Service Fees, etc.) available;

to process and respond to enquiries and feedback received from you;

to maintain, develop, test, enhance and personalize the App to meet your needs and preferences as a user;

to contact you by telephone using auto-dialed or pre-record message calls or text (SMS) messages (if applicable) as authorized for the purposes described in this Privacy Policy and the Terms of Use;

to collect and analyse user activities and demographic data including trends and usage of the Service available on the App;

And to send you direct marketing communications and information on special offers or promotions.

b. We may also use your Personal Information more generally for the following purposes (although we will in each such case always act reasonably and use no more Personal Information than what is required for the particular purpose):

to undertake associated business processes and functions;

to monitor usage of the App and administer, support and improve the performance efficiency, user experience and the functions of the App;

to provide assistance in relation to and to resolve any technical difficulties or operational problems with the App;

to generate statistical information and anonymous analytics data for the purpose of testing, research, analysis and product development;

to prevent, detect and investigate any prohibited, illegal, unauthorised or fraudulent activities;

to facilitate business asset transactions (which may extend to any mergers, acquisitions or asset sales) involving us and/or any of our Affiliates; and

to enable us to comply with our obligations under any Applicable Law (including but not limited to responding to regulatory enquiries, investigations or directives) and conducting audit checks, due diligence and investigations.

4. SHARING OF PERSONAL INFORMATION WHICH WE COLLECT

a. We may disclose to or share with Affiliates and other parties your Personal Information for any of the following purposes as well as for such other purposes permitted by Applicable Law (although we will in each such case always act reasonably and disclose or share no more Personal Information than what is required for the particular purpose):

where required or authorised by Applicable Law (including but not limited to responding to regulatory enquiries, investigations or directives, or complying with statutory or regulatory filing and reporting requirements), for the purpose so specified in that Applicable Law;

where there is any form of legal proceeding between you and us, or between you and another party, in connection with, or relating to the Service, for the purposes of that legal proceeding;

in connection with, or during negotiations of, any merger, sale of company assets, consolidation or restructuring, financing or acquisition of all or a portion of our business by or into another company, for the purposes of such a transaction (even if the transaction is eventually not proceeded with);

where we share your Personal Information with third parties (including Credit Reference Bureaux, Banks, Mobile Network Providers, collection agencies，our agents, vendors, suppliers, contractors, partners and any others who provide services to us, perform functions on our behalf, or whom we collaborate with), for or in connection with the purposes for which such third parties are engaged or the purposes of our collaboration with such third parties (as the case may be), which may include allowing such third parties to introduce or offer products or services to you, or other conducting activities including marketing, research, analysis and product development;

where we share Personal Information with Affiliates, we will only do so for the purpose of them helping us to provide the App or to operate our business (including, where you have subscribed to our mailing list, for direct marketing purposes), or for the purpose of them conducting data processing on our behalf. For example, our Affiliate in another country may process and/or store your Personal Information on behalf of our group company in your country. All of our Affiliates are committed to processing the Personal Information that they receive from us in line with this Privacy Policy and Applicable Law;

where we publish statistics relating to the use of the App and the Service, in which case all information will be aggregated and made anonymous; and

when we believe in good faith that disclosure of your Personal Information is necessary to comply with Applicable Law, prevent physical harm or financial loss, report suspected illegal activity, or to investigate violations of our Terms of Use;

b. Where it is not necessary for the Personal Information disclosed or shared with other parties to be associated with you, we will use reasonable endeavours to remove the means by which the Personal Information can be associated with you as an individual before disclosing or sharing such information.

c. Other than as provided for in this Privacy Policy, we may disclose or share your Personal Information if we notify you of this in advance and we have obtained your consent for the disclosure or sharing.

5. CROSS-BORDER TRANSFERS OF PERSONAL INFORMATION

Your Personal Information may be transferred to, stored, used and processed in a jurisdiction other than your home nation or otherwise in the country, state and city in which you are present while using any Service provided by us (“Alternate Country”), to companies Zimacash under Our group which are located outside of your home nation or Alternate Country and/or where Our Zimacash group’s servers and/or service providers and partners are located outside of your home nation or Alternate Country.

In such a case, We shall ensure that such Personal Information remains subject to a level of protection comparable to what is required under the Tanzania Laws (and, in any event, in line with our commitments in this Privacy Policy).

You understand and hereby consent to the transfer of your Personal Information out of your home nation or Alternate Country as described herein.

6. RETENTION OF PERSONAL INFORMATION

Your Personal Information will only be held for as long as it is necessary to fulfill the purpose for which it was collected, or for as long as such retention is required or authorised by Applicable Law. We shall cease to retain Personal Information, or remove the means by which the Personal Information can be associated with you as an individual, as soon as it is reasonable to assume that the purpose for which that Personal Information was collected is no longer being served by retention of Personal Information and retention is no longer necessary for legal or business purposes.

7. ACCESS AND UPDATE/CORRECTION OF PERSONAL INFORMATION

a. You may request us for access to and/or the correction of your Personal Information in our possession and control, by contacting us at the details provided below. Subject to Applicable Law, we reserve the right to charge an administrative fee for such requests.

b. We reserve the right to refuse your requests for access to, or to correct, some or all of your Personal Information in our possession or control, if permitted or required under any Applicable Law. This may include circumstances where the Personal Information may contain references to other individuals or where the request for access or request to correct is for reasons which we reasonably consider to be trivial, frivolous or vexatious.

8. WHERE WE STORE YOUR PERSONAL INFORMATION

a. The Personal Information that we collect from you may be stored at, transferred to, or processed by third party service providers. We will use all reasonable endeavours to ensure that all such third-party service providers provide a level of protection that is comparable to our commitments under this Privacy Policy.

b. Your Personal Information may also be stored or processed outside of your country by personnel who work for us in other countries, or by our third-party service providers, suppliers, contractors or Affiliates, to the extent permitted under Applicable law. In such a case, we will ensure that such Personal Information remains subject to a level of protection comparable to what is required under the laws of your country (and, in any event, in line with our commitments in this Privacy Policy).

9. SECURITY OF YOUR PERSONAL INFORMATION

Confidentiality of your Personal Information is of utmost importance to us. We will make all reasonable efforts to protect and secure your Personal Information against access, collection, use or disclosure by unauthorised persons and against unlawful processing, accidental loss, destruction and damage or similar risks. Unfortunately, the transmission of information via the Internet is not completely secure. Although we will do our best to protect your Personal Information, you acknowledge that we cannot guarantee the integrity and accuracy of any Personal Information which you transmit over the Internet, nor guarantee that such Personal Information would not be intercepted, accessed, disclosed, altered or destroyed by unauthorised third parties, due to factors beyond our control. You are responsible for keeping your Account details confidential and you must not share your password with anyone and you must always maintain the security of the Mobile Device that you use.

10. CHANGES TO THIS PRIVACY POLICY

We may review and amend this Privacy Policy at our sole discretion from time to time, to ensure that it is consistent with our future developments, and/or changes in legal or regulatory requirements. If we decide to amend this Privacy Policy, we will notify you of any such amendments by means of a general notice published on the App and/or Website, or otherwise to your e-mail address set out in your Account. You agree that it is your responsibility to review this Privacy Policy regularly for the latest information on our data processing and data protection practices, and that your continued use of the App or Website, communications with us, or access to and use of the Service following any amendments to this Privacy Policy will constitute your acceptance to the amendments.

11. LANGUAGE

If there is any inconsistency between the English version of this Privacy Policy and other language versions, the English version shall prevail.

12. ACKNOWLEDGEMENT AND CONSENT

a. By accepting the Privacy Policy, you acknowledge that you have read and understood this Privacy Policy and you accept all of its terms. In particular, you agree and consent to us collecting, using, disclosing, storing, transferring, or otherwise processing your Personal Information in accordance with this Privacy Policy.

b. In circumstances where you provide us with Personal Information relating to other individuals (such as Personal Information relating to your spouse, family members, friends or emergency contact), you represent and warrant that you have obtained such individual’s consent for, and hereby consent on behalf of such individual to, the collection, use, disclosure and processing of his/her Personal Information by us.

c. You also consent and expressly authorise use to contact you and your emergency contact who has expressly agreed upon it, to verify your information or when we are unable to contact you via other methods or when we have not received your payment in connection with Loan.

d. You may withdraw your consent to any or all collection, use or disclosure of your Personal Information at any time by giving us reasonable notice in writing using the contact details stated below. You may also withdraw your consent for us to send you certain communications and information via any “opt-out” or “unsubscribe” facility contained in our messages to you. Depending on the circumstances and the nature of the consent which you are withdrawing, you must understand and acknowledge that after such withdrawal of consent, you may no longer be able to use the App or certain of the Service. A withdrawal of consent by you may result in the termination of your Account or of your contractual relationship with us, with all accrued rights and obligations remaining fully reserved. Upon receipt of your notice to withdraw consent for any collection, use or disclosure of your Personal Information, we will inform you of the likely consequences of such withdrawal so that you can decide if indeed you wish to withdraw consent.

13. MARKETING AND PROMOTIONAL MATERIAL

a. We may send you marketing and promotional communications via post, telephone call, short message service (SMS), e-mail, online messaging, or push notifications via the App to notify you about special privileges, promotions, or events offered or organised by us, our partners, sponsors, or advertisers, or to provide updates on our App and/or the products and services offered therein.

b. You may opt out from receiving such marketing communications at any time by clicking on any “unsubscribe” facility embedded in the relevant message, or otherwise contacting us using the contact details stated below. Please note that if you opt out, we may still send you non-promotional messages, such as Loan disbursement or repayment receipts, or information about your Account or the App.

14. THIRD PARTY WEBSITES

a. The App and Website may contain links to websites that are operated by third parties. We do not control nor accept liability or responsibility for these websites and for the collection, use, maintenance, sharing, or disclosure of data and information by such third parties. Please consult the terms and conditions and privacy policies of those third-party websites to find out how they collect and use your Personal Information.

b. Advertisements contained on our App or Website operate as links to the advertiser’s website and as such any information they collect by virtue of your clicking on that link will be collected and used by the relevant advertiser in accordance with the privacy policy of that advertiser.

15. LIMITATION OF LIABILITY

We shall not be liable for any indirect, incidental, consequential, special, exemplary or punitive damages arising out of:

a. Your use of or reliance on the App or your inability to access or use the App; or

b. Any transaction or relationship between you and any other third party, even if we have been advised of the possibility of such damages.

We shall not be liable for delay or failure in performance resulting from causes beyond our reasonable control.

16. HOW TO CONTACT US

If you have any questions regarding this Privacy Policy or you would like to obtain access and/or make corrections to your Personal Information, please contact us at help@zimacash.co

CREDIT POLICY

1.0 Introduction

1.1 Purpose

The purpose of this Policy and Procedures Manual is to create a set of

standardized lending processes and procedures for TEMERIA MICROFINANCE LIMITED. This policy aims at ensuring that lending activities of the company conform to acceptable and established best practices of Microfinance. Users of this policy are Credit Officers, Managers,

Board, and external stakeholders such as auditors and lenders.

1.2 Scope of Operations

TEMERIA MICROFINANCE LIMITED intends to provide financial

servicesto its targeted clients in DAR ES SALAAM - TANZANIA and in the near future to the different regions of Tanzania mainland. Sustainability of the business in the major cities shall be the key factor to go into other municipalities and township across the country while taking into

consideration demand of the services and competition in those areas.

1.3 Sources of Fund

The sources of funds for lending shall be as follows:

• Shareholder’s fund

• Borrowing from banks and other financial institutions

• Retained earnings of the company

1.4 Types of Products

The company shall offer the following types of microfinancing products:

• Business Loans

• Housing Microfinance Loans (In Future)

• Emergence Loan

1.5 Target Market

TEMERIA MICROFINANCE LIMITED focuses to address the credit

needsof employed individuals and entrepreneurs. These are individuals who are employed by the government, self-employed, others operating their small and micro enterprises in informal set-ups. The company aimed at serving urban employed individuals and later enters the rural market. The key advantages of serving first the urban market may include:

• Lower transactions costs (shorter distances) for clients

• Potential higher chance of repayment, since interactions with clients can be more frequent

• Possible leveraging through relationships with banks (e.g. use of

cheques)

• Potential higher chance of repayment due activeness of the urban

business environment, contrary to predominant seasonality

characteristics of rural areas.

1.6 Code of Conduct

• The Credit and all staff shall always behave respectfully towards company’s clients.

• All staff should maintain a professional distance in his/her dealings with company’s clients.

• All information regarding company’s clients is to be treated in strict confidence. Confidentiality includes taking care not to store files in places that are accessible to the public.

• Orderly file management makes possible to get more work done in the same amount of time, which ultimately has a positive impact on operations.

• Credit staff must take adequate care in all phases of credit processes to determine that clients have the capacity to repay without becoming over-indebted.

• Credit staff must communicate clear, sufficient and timely information in a manner and language clients understand so that clients can make informed decisions.

• All staff must be in position to provide financial education to clients with the view of protecting them from irresponsible financial practices.

2.0 Products and Services

2.1 Online Digital Loans

Digital lending is the service of providing loans and credit facilities with the help

of digital technologies and online platforms including mobile applications in assessing the creditworthiness of the borrowers with the help of data analytics . Digital lending is becoming increasingly popular with the faster spread of digital finance culture, platforms, and infrastructure like faster net connectivity.

Due to the development of technology, Temeria Microfinance Limited as of currently performing its operations of providing the loans to it customers throughout the digital lending platforms and to state specifically are the mobile applications. As the service provider basically issuing the loans via ZIMACASH and M - SAFI the mobile applications to which both are regulated under the umbrella of Temeria Microfinance Limited as the Licensed Microfinance Service Provider and the Same as the nature of the operations now the company is only based on the issuance of loans to the individuals only despite the company intention was the issuance of loan to the different categories as explained below.

This product is categorized into two sub-products:

a. Group Loans (In Future )

These loans designed to meet credit needs of micro-entrepreneurs regardless of their gender, literacy level, and business turn-over. This facility shall be extended to finance existing business and not start-up micro enterprises. The eligible borrowers shall have the following characteristics:

o Eighteen (18) years and above

o Micro entrepreneur who either lives or works in area that is within reach from our office

o Ready to join and form a group of self-guaranteed members

The minimum loan amount is TZS 250,000 and the maximum loan amount is TZS 1,000,000. The loan amount shall be in predetermined cycles; Cycle 1 (250,000), Cycle 2 (600,000), and Cycle 3 (1,000,000). The loan sizes are subject to review time after time based on the demand of the product, experience and financial capacity of the company.

The repayment frequency shall be weekly to enable the clients afford small

due installments. The repayment periods shall be twelve (12) weeks,

sixteen (16) weeks, twenty (20) weeks or twenty-four (24) weeks. Despite of the self-screening and monitoring among group members, thorough analysis of the ability of the micro business to service loan and character assessment remain the key prerequisite. Group guarantee shall be the primary collateral substitute in this sub-product.

b. Individual Loans

This type of loan targets individuals who seek financing facility to enhance their working/business capital. The facility shall be extended only to existing businesses not start-up businesses. The eligible borrowers shall be small entrepreneurs who have been operating the same business in the same permanent premises for period of more than 12 months.

The minimum loan amount is TZS 10,000 and the maximum loan amount is TZS 1,500,000. The loan sizes are subject to review time after time based on the demand of the product, experience and financial capacity of the company. Repayment period ranges from 7 to 30 days

The repayment frequency shall be monthly to allow sufficient turn over on borrowers’ businesses. The focal point of analysis for this product is the ability of the individual/business to service the loan. However, other sources of income shall be weighted considerably as fallback position during the analysis.

2.2 Emergence Loans to Individuals

This facility targets individuals with short term liquidity crisis (to cover school fees and health problems) but are expecting reliable future cash flow (e.g. salary, bonus, commission, gratuity) to service the loan. The future cash flow shall be substantiated before the endorsement of the facility. An applicant shall be expected to disclose honestly the reliable source of repayment. The maximum loan in this product is TZS 1,500,000 and the maximum repayment period is one(1) week .

3.0 General Principles and Guidelines

3.1 Key responsibilities of Credit Staff

The Credit Officer is generally responsible for the following major tasks in performing his or her duties:

• Assessing the demand and competition for financial services in their target area.

• Outreaching and promoting the organization in the target area.

• Receiving and following up enquiries, screening prospects, educating and orienting prospective clients.

• Providing clients with prescribed Loan application forms and checklist of requirements.

• Supporting clients in analyzing Loan applications, evaluating and taking appropriate security to secure the loans, documenting Loan decisions, and forwarding applications to Manager for approval and disbursement.

• Following up disbursements and managing Loan repayment (monitoring).

• Following up clients, providing financial and business advice, and supporting individuals/groups/associations in formulating and carrying

out strategies to recover delinquent loans.

3.2 Interest rate and Fees

Interest rate to be charged shall take into consideration cost of borrowed funds, provision for loan losses, operational & administrative expenses, servicing requirements, inflation, risk factors, competitive interest rate structure prevailing in the market at reasonable profit, etc.

A fixed service fee of 20% is applied, and the daily interest rate ranges from 0.01% to 4%. The interest rate will be adjusted based on the customer's repayment behavior and credit status.

Interest Rate Structure is subject toperiodical review and approval by

man

agement and board respectively.

Provision of the credit is not subject to upfront payment of Loan

application fee and insurance premium as they are both inclusive in the interest rate.

3.3 Purposes of Loan

TEMERIA MICROFINANCE LIMITED shall provide loans to borrowers whose activities are legal. The credit facilities will accommodate for diversified needs of the clients:

• Loans for micro and small trading activities

• Loans to cope with emergencies

• Loans for home improvement

3.4 Loan duration/Loan term

Loan maturity of all products shall not exceed 1 months; the minimum loan term is one week and the maximum loan term is one month (1 months).

3.5 Loan Guarantee Requirement

It is a policy that, in the loan application TEMERIA MICROFINANCE

LIMITED will apply the loan guarantee requirement and that is to say the borrower in the application for loan shall be required to have one Guarantor who will assume a debt obligation in the event of non-payment by borrower.

3.6 Loan Restructuring

Subject to this policy, TEMERIA MICROFINANCE LIMITED may restructure a loan in terms of instalment amount or payment period for a borrower facing cash flow problems or financial distress.

3.7 Collateral

It is the policy of the company to secure loan by obtaining marketable security necessary to recover loan at the last resort when borrower fail to

honor debt obligation. In order for security to be acceptable by the company, it should possess certain qualities:

• Employed individual (including government officials), will have to be recommended by fellow employed individual.

• Employed individual should bring together with the application form identity card, salary slip and recommendation letter from employer.

• It must have a stable and ascertainable sale value.

• It must be adequate to cover the amount of the loan with interest for the entire loan term, plus any penalty charges over the amount not paid when due, or at expiration.

• A security has to be easily sold within the local market, which means there must be sufficient buyers for it. In case of land, it will depend on its location.

• It must be transferable to a new owner at low cost and with few formalities.

Legal opinion must be obtained before disbursement to avoid any confusion. After the loan is disbursed, security pledged should be inspected time after time to ascertain on-going value. In the event of deterioration in quality and value, borrower must be asked in writing to provide other/additional collateral acceptable to the Company within seven days. In the event of borrower fail to repay the loan (principal and interest) on time as well as on dates promised by him/her subsequently, the Company shall be obliged to seize and sell the collateral and recover the loan.

3.8 Collateral Disposal and Management

The company’s loan collateral management and disposal procedures shall be inconformity with procedures lay down under the provision of regulation 41 of the Microfinance (Non-Deposit Taking Microfinance Service providers) Regulations 2019;

The company shall normally require and obtain documented evidence of the types of security to be pledged and proof of ownership when loan application is approved. The company accepts the following types of security:

• Landed properties evidenced by Offer letter/certificate of occupancy/ residential license/sale agreements

• Chattels: household assets/business assets

• Shares listed at Dar es Salaam Stock Exchange, and

• Collateral substitutes (non-traditional collaterals)

3.9 Disposal of Collateral

The Disposal of Collateral is done in two ways;

1. Once the client settles his/her loan then the security is returned back

to the owner/the borrower.

2. Also, security is disposed when the client fails to settle his/her loan then that security is sold either through (1) a PRIVATE SALE in cooperation with the collateral owner or (2) through an AUCTION SALE involving a third-party auction company in order to settle the loan of the owner/borrower.

3.7.1 Collateral Disposal Procedures.

The TEMERIA MICROFINANCE LIMITED shall not dispose of any

mortgagedproperty, unless sixty days have passed since a written demand notice was issued to the borrower requiring him or her to pay any outstanding loan.

• For a collateral other than mortgaged property, The TEMERIA MICROFINANCE LIMITED shall not dispose such collateral, unless a sufficient notice is given as provided for in the loan agreement to the borrower requiring him or her to pay any outstanding loan.

• The TEMERIA MICROFINANCE LIMITED may dispose of the collateral given by the borrower by way of public auction or private treaty.

• Before sale of a collateral, The TEMERIA MICROFINANCE LIMITED shall appoint a registered independent valuer to undertake valuation of theproperty to determine a forced sale value and market value of the collateral.

• The TEMERIA MICROFINANCE LIMITED in the disposition process shallnot sell the collateral at less than the forced sale value in the

initial two auctions unless such collateral does not sell in the first two auctions at a value higher than the forced value.

The proceeds from the sale of collateral shall be applied as follows-: (a) to the payment of all monies outstanding on the loan;

(b) to the recovery of costs and expenses properly incurred and incidental to the sale;

3.7.1 Collateral Management

• Once the borrower (mortgagee) pledges his property to secure his/her loan then from there, that security remains into TEMERIA MICROFINANCE LIMITED, that means TEMERIA MICROFINANCE LIMITED becomes the custodian of that security until the loan is settled.

• The TEMERIA MICROFINANCE LIMITED shall maintain an up- to-date register of all collaterals held for securing loans.

3.10 Loan Documentation

Data Use: All customer data is collected only for KYC and loan processing

purposes. No physical data is stored, only digital records.

Data Confidentiality: Customer data will not be shared with third parties

unless required by law or with Customer consent.

Data Deletion: After the loan and business relationship ends, all customer

data will be permanently deleted, except as required by law.

Security: The Company ensures appropriate measures are in place to

protect customer data from unauthorized access or breaches.

If any document is retrieved from the safe by Accountant /Manager for any purpose, he or she shall be liable for the security retrieved for the time it remains in his or her possession.

3.11 Approval Limit

As approved by the TEMERIA MICROFINANCE LIMITED management, the approval limits shall be as follows:

• Board of Directors Max. TZS 10,000,000/=

• General Manager Max. TZS 5,000,000/=

• Branch Manager/Branch Credit Committee Max. TZS 2,000,000/=

3.12 Loan Provisions

TEMERIA MICROFINANCE LIMITED shall provide for loans; standard (current), substandard, doubtful, and bad loans as follows:

• Standard (0 days past due) 2%

• Especially Mentioned (1-30 days past due) 25%

• Substandard (31-60 days past due) 50%

• Doubtful (61-90 days past due) 75%

• Loss (above 90 days) 100%

3.13 Write-off

The company will hire a reputable Financial Services firm that shall write-off any loan that is considered uncollectible, loans that are 3 months over dues. When making the decision to write-off part of portfolio, the following must be adhered:

• Management of the company must prepare a propose list of loans to be written off and seek approval from Board of Directors.

• Write-offs must be approved by Board of Directors.

• Write-off of the principal does not cancel borrower’s indebtedness to the company.

• Write-off must not be communicated to the borrower, efforts to collect the balance shall continue as before

• When cost of recovery efforts exceeds the outstanding loan balance, management shall direct officers to stop the exercise where deem fit

4.0 Risk Management

Risk management involves the whole process of risk identification, assessment, mitigation, registering risk as well as monitoring it. The core purposes of risk management is to enable management and staff to have a clear understandings of inherent risks facing TEMERIA MICROFINANCE LIMITED, enable them to develop and implement appropriate risk mitigation strategies. Principally the company faces two categories of risks; operationalrisks and financial risks. Operational risks consist of all risks that are related to the operations of the company. Financial risks consist of all risks related to financial assets of the company.

4.1 Operational Risk Management

Operational risk management methods can be preventive, detective or corrective. Preventive controls avert undesirable outcomes before they happen, e.g. establishing a proper system for handling loans and training staff in the application of the system. Preventive controls should be the focus of all internal controls’ efforts. Detective controls help to identify any undesirable outcomes after they occurred (e.g., internal audits or investigations of alleged fraud cases). Corrective controls make sure that appropriate actions are taken to reverse occurred problems or to see that they do not recur (e.g., reviewing policies and guidelines, re-training staff).

The core of operational risk management is Internal Controls (IC). IC is part of the overall control environment of a financial institution which includes general risk prevention, internal audits and external audits. The objectives of IC are to protect the resources that an institution owns, promote operational efficiency and to ensure compliance to the all relevant laws and regulations. Key elements of IC are:

• Honest and capable employees

• Clear delegation and segregation of duties

• Proper procedures for processing of transactions

• Suitable documents and accounting records

• Adequate physical control over assets and records

4.2 Credit Risk Management

Credit managers need to know the quality of a loan portfolio in order to detect and manage loan portfolio risks. Regular loan portfolio reports should contain the following data on the entire portfolio and on specific risk pools:

• Portfolio outstanding: principal amount of all loans outstanding (due and past due) at the end of the period; it does not include projected future interest income out of existing loans.

• Loans outstanding: number of all loans that have not yet been fully repaid

• Number of loans in arrears: all loans that have one or more payments in arrears

• Value of payments in arrears: amount of payments that are in arrears (principal + interest; or principal only)

• Portfolio at risk (PAR): outstanding principal balance of all loans in arrears; usually this category is broken down into sub-categories (e.g.

PAR 1-30 days; PAR 31-60 days; etc.)

• Loan loss provisions required due to loan portfolio at risk

• Value of loans written off during a certain time period (e.g., monthly)

Based on the data provided by the loan portfolio reports various ratios can be calculated to provide useful management information:

Ratio Variables

Portfolio at Risk (PaR) Ratio Balance of loans in Arrears Outstanding loan portfolio

Arrears Ratio Amount of payments in Arrears Outstanding loan portfolio

Delinquency Ratio Number of delinquent loans (loans in arrears) Total number of outstanding loans

Loan Loss Provision Ratio Loan loss provision required Outstanding loan portfolio

Loan Loss Ratio Loan amount written-off in the period

Average outstanding portfolio in the period

4.3 Liquidity Risk Management

Liquidity can be defined as the ability of a TEMERIA MICROFINANCE LIMITED to honor all cash payment commitments as they fall due. These commitments can be met either by drawing from a stock of cash holdings, by using current cash inflows, by borrowing cash or by converting liquid assets into cash. Liquidity management operates in an environment of uncertainty. There is uncertainty about future customer behavior, about general macroeconomic conditions, etc. Insufficient liquidity can force the company to access expensive backup liquidity sources (e.g., bank overdraft), temporarily cease to make loans, or in extreme cases default on its loan payments.

Liquidity risk management is all about:

• Honoring all cash outflow commitments on a daily and ongoing basis,

• Minimize the cost of foregone earnings on idle liquidity,

• Avoid additional cost of emergency borrowing and forced liquidation of assets.

The company shall adopt Maturity gap analysis to manage liquidity risk. This tool is used to quantify the gap between the assets and the liabilities

that mature in a given period. It allows company to establish when it will have too little or too much liquidity (short versus long position), and to manage its asset-liability mix accordingly.

Forecasting cash flows is another tool of liquidity risk management. The company shall regularly estimate their expected cash flow instead of focusing only on the contractual periods during which cash may flow in or out. For example, cash outflows can be ranked by the date on which liabilities fall due, by the earliest date of liability holder can exercise an early repayment option, or by the earliest date that contingencies can be called upon.

Available Diversified funding sources provide a fallback position for the company to mitigate liquidity risk. The ability to readily convert assets into cash and to access various sources of external funding in case of a liquidity shortage is very important.

5.0 Credit Processes and Procedures

5.1 Initial Interaction with Prospective Borrower

Interactions with potential borrowers start with promotion meetings;

company’s officials shall arrange with employers of the targeted individual, business communities. These meetings will used to obtain opportunities to disseminate company’s products and services to the public. This first contact is important because this is where applicants get a chance to understand the institution’s products and determine right away if they are in line with their expectations. After the promotion meetings, officials shall invite the interested persons to company’s office for further intake sessions.

Arrival of the prospective borrowers at the further is the beginning of the client recruitment process. The Credit Officer shall explain thoroughly the loan product and eligibility criteria in order to provide optimal information to clients so that they can make sound judgment. Eligible clients shall be given Loan Application Form and checklist of requirements to comply with.

5.2 Loan Application Process

Once the client is given with an application form, he or she shall fill it on his/her own. They can ask the Credit Officer for clarification, but the Credit Officer shall not fill it in for the client. When the application has been completed and returned, the Credit Officer reviews it and asks additional questions, if needed.

The application form to be filled with a client shall include at minimum the following particulars of the client.

a) Full name;

b) Date of birth or date of registration;

c) Place of residence or place of business;

d) Occupation or type of business;

e) The loan purpose;

f) Economic sector;

g) The loan amount requested;

h) The collateral offered;

i) Marital status;

j) Number of dependents;

k) Place of employment;

l) Current income;

m) Expenses and assets;

n) Other loans outstanding; and

o) Such other information as may be required.

Also, loan officer shall assess some of the key information with regard to the applicant and his/her character includes:

• Family: Parents? Spouse? Children? Health?

• Education/Experience: School? Professional qualification? Professional experience?

• Business: What kind of business? When it started? Who owns/manages/works?

• Cash flow: average? Seasonality?

• Assets: Fixed assets? Current assets

• Liabilities: Current liabilities? Long-term liabilities

• Insurance: Private? Business?

If the client and the business look promising and there are no suspicious circumstances, Credit Officer shall inform the Manager about the client and together they make the decision to continue with credit analysis or reject the application. Credit Officer should set up a scheduled site visit for that the same day or the next.

5.3 Business and Household Site visits

The site visit is the first part of the loan analysis and also most important one. During site visit the Credit Officer gathers all kinds of information from his own observations, from interviews and from collected evidences. The site

visit results in financial data, household and business information necessary to prepare the loan analysis.

A standard checklist for the site visit ensures that Credit Officer gathers the information needed. The five C’s can be of much use for preparing and conducting the site visit:

• Character: Personal and household information (honesty, integrity, family situation and status, recent changes in business/family assets, reputation in community, openness and compliance with group/society).

• Capacity: Client’s ability to repay the potential loan (cash flow of household and business; demonstrated capacity from repayment of other loans).

• Capital: client’s business and household assets (cash, bank accounts, land, building, equipment, farm animals, stock, vehicles, etc); quality of assets and market value; source of funding of assets (borrowed funds vs. own funds).

• Collateral: Business or household assets which can be used as security; alternatively: guarantors.

• Conditions: External conditions and risks that can impact the client’s business or household (markets; competition; price fluctuations; production risks; natural disasters).

5.4 Financial Analysis

Based on the information from the site visit and interviews the Credit Officer shall be ready to prepare the financial analysis. The purpose of the financial analysis is to establish the financial feasibility of the client’s business and the client’s loan repayment capacity. Financial analysis shall involve the preparation of Balance sheet, income statements, cash flow statement, and financial ratios.

When preparing simple balance sheet, Credit Officer shall take stock of;

• All household and business assets

• Cash on hand and at Bank

• Household and Business liabilities (loans and account payable)

• All debts others have with the clients (loans and accounts receivable).

This simple balance sheet can help the Credit officer to establish the level of indebtedness and debt capacity of the client. Clients who have financed more than 50% of their assets by debt may have already reached their borrowing limit. The liabilities of the clients must be assessed thoroughly (when are they due? How will it affect the liquidity of the client? etc). The balance sheet does help to identify the suitable collateral. The balance sheet

also can help to monitor net working capital and liquidity situation of the client. Net working capital is difference between current assets and current liabilities. The ratio of current liabilities over current assets indicates the liquidity situation of the client. However, the balance sheet alone cannot answer the question whether a client should get a loan or not. Credit officer is supposed to prepare income statement as well.

Income statement (profit and loss statement) presents revenues, expenses and resulting net income for the time period. The profit and loss statement is used to assess the profitability, future debt capacity and repayment capacity of a borrower. It shows the likelihood of a business to service debts in future. A good way for the Credit officer to go about data collection for the income statement is the following:

• Ask the client about the net income of the best and worst months of the last year and try to assess the fluctuation level in net income.

• Ask the client about business and family incomes and expenses during the current month and last month: He/she shall in detail, sales quantity

and sales prices, input quantity and prices, salaries, transport, electricity, repairs and maintenance, etc

• Ask the client for cash book, bills or other documents as evidence for recent revenues and expenses.

• Ask the family members, especially client’s spouse and other family members’ incomes and expenses.

• Make own assessment of revenues and expenses based on experience (e.g., from similar enterprises).

The cash flow statement is the most important element for credit analysis. The monthly or weekly cash flow shows the cash requirements of a client and his or her loan repayment capacity. Debts are paid by cash, not by profit. Clients who are not liquid cannot repay their loan installments, even though their business may be profitable. This statement helps the Credit officer to establish the ability of a client to meet debt obligations, to be on the safe side the client’s cash flow should always have a risk buffer; not more than 50% of the net cash flow should be used for paying loan installments in any month.

After completing the financial analysis, the next step is present the application before Credit Committee.

5.5 Credit Committee

In order to prepare for the Credit Committee, the Credit Officer must put all information together for the appraisals. The loan file must consist of the following:

• Loan application form

• Site visit documentation

• Financial analysis

• Legal documents (business license, title deeds, etc)

• Loan conditions recommended by the Credit officer

In the Credit Committee the Credit Officer must present the case. One case should not take more than 10 minutes to present and another 10 minutes for discussion. The committee shall question the Credit Officer’s assumptions, ask for evidences, assess risks and mitigation strategies, then approve or reject the loan. Although the credit committee decides whether a loan will be granted, the Credit officer remains responsible for every loan he or she recommended to the credit committee. The main function of the Credit

committee is to cross-check the Credit officers’ loan appraisal

5.6 Loan Establishment

With the use of Loan tracking system (IT application), the Credit Officer shall capture the transactions (registration, application of loans) in the loan tracking system. The approved applications shall be established in the system whereby application date, approved date, first installment date, loan amount, last installment date, installment amount be defined. The establishment shall enable the Credit officer to extract loan repayment schedule

5.7 Loan Disbursement

Once the loan is approved by Credit Committee, the following step is to disburse the loan to an applicant. The Applicants will be called asked to pay upfront fees (loan application fee and credit life insurance premium) and submit original security documents (title deeds, residential license, motor vehicle cards, etc) and sign loan contract with the company. After fulfilling all requirements as per company’s policy, the client shall be given an open bank cheque endorsed by two company’s signatories/cash and Loan repayment schedule. In case of cheque disbursement, Credit Officer shall direct the clients the location of bank.

5.8 Loan Monitoring

With the help of loan tracking IT system, Credit staff shall be able to track and manage the outstanding loan portfolio. From the IT system they shall be able to produce daily print-outs showing clients’ repayment performance. A late payment has to be followed up immediately. Each Credit officer is responsible for monitoring of his /her own customer portfolio. The Credit staff should pursue the following:

• Daily track of loan repayment and immediately react on delinquency

• Show clients that hired Financial Services firm is serious about on-time repayment

• Detect early warning signals for possible delinquency

• Get timely information if there are problems so that the Credit officer can follow up immediately.

5.10 Delinquency Management

A loan is delinquent as soon as the client missed one single payment. Delinquency is expensive to any lending organization; it is associated with extra collection costs, loan loss provision, and legal fees. Delinquency reduces income due to delayed interest payment, slower portfolio rotation and slower portfolio expansion. Credit Officers must immediately follow up on delinquent loans (zero tolerance). The credit officer must immediately contact the client and talk about problem. Delinquency management should follow a standard procedure:

• 1 day overdue: credit officer shall visit client; diagnose problem; try to collect payment from spouse or other family members.

• If not successful on first day: credit officer shall agree on possible solution with client and keep in touch every day until delinquency is finished.

• If not successful after two weeks: credit officer shall deliver first warning letter and inform guarantors; continued being in touch daily with client, family members and guarantors.

• If not successful after three weeks: credit officer shall deliver second warning letter; and continued being in touch daily with client, family members and guarantors.

• If not successful after four weeks: credit officer shall deliver final letter and start legal action.

6.0 CREDIT PROCEDURES FOR STAFF LOANS

6.1. General

• The Company provides staff personal loans and staff collateral

loans (hereinafter jointly “Staff Loans”) according to the product conditions, terms and conditions approved by the Board of Directors.

• All staff meeting the eligibility criteria set out in Annex 2A are in

principle eligible for staff loans. However, each staff loan is subject to a sovereign decision of the Managing Director, and no staff is automatically to a staff loan only by virtue of fulfilling the aforementioned general eligibility requirements.

6.2. Application and processing of Staff Loans

• A staff member who wishes to apply for a staff loan (hereinafter, “the applicant”) shall download the staff loan application form (Annex 3A from the company’s shared folders).

• The applicant shall fill in the staff loan application form and approach the Managing Director in order to receive recommendation for the application.

• The Managing Director shall review the application in respect of the applicant’s formal compliance with the eligibility criteria for the Staff Loan product in question and the recent performance and

overall conduct of the applicant, and subsequently state on the Staff Loan application form if she/he recommends the Applicant for

receiving the requested staff loan. The Managing Director shall withhold a positive recommendation if she/he has reasonable

grounds to question the integrity of the applicant or the applicant’s commitment to remain a staff member of the company during the requested term of the loan.

• If the recommendation from the Managing Director is positive, the Applicant shall submit the application together with a copy of his/her most recent pay slip to the Administrative Officer for further processing.

• Upon receiving the complete application documents from the Applicant, the Administrative Officer shall process the application as follows;

o Verify if the application form has been correctly filled and that the applicant does indeed meet all formal eligibility criteria for the requested Staff Loan product;

o Review the applicant’s staff file for any warning letters or other formal disciplinary correspondence that has been issued in the 12 months prior to the application date;

o Check in the system if the applicant has any outstanding loans or guarantee commitments with the company, or obtain such information from the Credit Department or a person delegated by the Managing Director;

o Confirm that the net monthly payment as stated by the applicant is correct (in accordance with the specific calculation guidelines per section 2.6), and that no other debts by the applicant to the Company (example: from prior advance payments) are outstanding without reasonable explanation;

• The net monthly payment shall be calculated after all internal and external deductions. Internal deductions are all deductions connected with the applicant’s salary at the Company (like P.A.Y.E, social security fund contribution, settlement of advance and other staff loan payments, etc), external deductions are any deductions made by the Company for settlement of external obligations (example: loans in other banks or institutions, students loans, etc.).

• In case the applicant is by virtue of his/her staff level entitled to bonus payments, the calculation of the net pay shall include the bonus payment. If available, average data for the last 6 monthly payments shall be included into the calculation of the average monthly net payment, if the staff is working for less than 6 months, maximum available data shall be included into the calculation, but not less than 3 months. In case the applicant has changed positions

during the last 6 months, only the bonus payments on his/her current position shall be taken into consideration.

• Having completed the review procedures described in Section 2.5, the administrative Officershall complete staff loan application form, sign it and submit it to the staff loan credit committee for decision. The staff loan application form shall contain an explanation in writing by the administrative officer in any of the following cases:

o Non-compliance of the applicant with any of the formal eligibility criteria;

o Applicant has received a warning letter or similar disciplinary correspondence during the last 12 months;

o Applicant has any other non-interest-bearing liabilities

towards the Company (example; from prior advance

payments);

o Applicant has any other borrowings or other types of liabilities towards his\her previous employer or another financial institution.

• The staff loans credit committee shall meet at regular intervals, if there are outstanding applications at least once per month. The staffing and voting rights for staff loans credit committee are specified in the Annex 2 (types of credit committees). Contrary to other credit committees, the staff loans credit committee can take resolutions in writing (by circulation), unless no special circumstances as listed under Section 2.8.1.1 through 2.8.1.4 are

to be considered (in which case a physical meeting is mandatory).

• After the loan approval, the HR officer shall collect the signed staff loan decision form from the members of the staff loan decision form and submit a copy of it, together with the application documents, to the credit back-office section of the branch of the

applicant for processing. The original decision form shall be retained in the staff file, but may be made available temporarily to the Branch Manager if requested.

• Having received the application and decision documents from the HR officer, the credit back-office staff enters the application and decision data for the staff loan in the LFS MBS to prepare a staff personal loan agreement or a staff collateral loan agreement (as applicable and produce the Repayment plan.

• When creating the repayment plan, the credit back-office staff shall ensure that the repayment dates of the approved staff loan shall coincide with the salary payday as indicated by the HR Officer from time to time. In case the staff loan is disbursed within the first 10 (ten) calendar days of the month, the first repayment date shall be within the same month; otherwise the first repayment date shall be in the month following the disbursement. Upon request in writing by the applicant, the staff loans credit committee may resolve that only interest be paid on the first installment (grace period).

• On behalf of the bank, both the loan contract and the repayment plan must be signed by the Branch Manager (not a senior loan officer as may be permissible for other loans in accordance with these procedures).

• After the applicant has signed the respective staff loan agreement and the repayment plan (and submitted other compulsory documentation on the conditions of the requested staff loan product), the Branch Manager shall authorize the disbursement of the approved loan amount in the LFS MBS and transfer the loan amount to the account of the borrower at the bank.

• The original contract and collateral documents (if any) shall be filed in accordance with Section 6 of these procedures.

6.3. Procedures in Case of Overdue Payments

• In general, the Managing Director shall undertake to ensure that the salary payday and the installment dates of staff loans shall be synchronized to the higher possible extent (or that installments are directly deducted from the salary payout, subject to legal and technical feasibility) so as to minimize the likelihood of occurrence of any arrears on staff loans.

• If a staff loan is nonetheless not repaid in line with the repayment plan, the Branch Manager whose Branch is holding the staff loan in its portfolio (in the case of head office staff, the head office branch) shall immediately inform the HR Officer, who shall then immediately contact the respective borrower to establish the grounds for non-repayment and induce him to settle the outstanding installment at the earliest.

• In case of prolonged overdue of a staff loan (e.g if the borrower is no longer a staff member of the bank and is no longer honoring his/her commitment), the HR Officer shall submit the case at a Head Office Recovery Committee, which shall then decide in appropriate measures including but not limited to the following:

o Disciplinary action (if the borrower is still employed with

the bank)

o Requiring additional collateral in support of the loan;

o In case of a staff collateral loan, measures to realize the collateral pledged in support of the loan according to the procedures for business loans as set out in section 11;

o Applying to the national/parastatal pension or social security funds to be able to offset the loan form pension or social security contributions paid by the bank hereto for the borrower.

• Unless otherwise specified herein, the business loan procedures in section19 (rescheduling), 21 (Early Repayments), 20 (Penalty Waiving and Refunding), 22 (22 write-offs) shall equally apply to staff loans, except for potential differences arising out of the different product conditions applicable to these products.

6.4. Additional Provisions for Staff Collateral Loans

• Staff Collateral Loans shall be in principle governed by the same procedures as other Staff Loans as set out herein, however the following additional rules shall apply:

o Application for Staff Collateral Loans shall be accompanied by detailed information on the purpose of the requested loan and the asset to be used as security for the loan (“the collateral item”), whether the collateral item is to be acquired with the loan or already in the applicant’s possession at the time of application. If and to the extent required by the Staff Loans Credit Committee, the Applicant shall supply information and documents in support of the estimated valuation of the asset in question, or answer other questions directly to the committee through physical participation.

o The Staff Loan Credit Committee may resolve that all or part of the loan amount be disbursed directly to the current owner of the asset rather than to the Applicant him/herself. The exact modalities of such payment shall be coordinated with the Applicant before payout. No payout to a third party shall be made without approval in writing of the Applicant.

o The Staff Loan Credit Committee may require the Applicant, upon receiving the loan, to provide satisfactory documentary evidence of the utilization of

the loan funds within a time frame stipulated by the committee, failing which the bank shall have the right to recall or cancel the loan subject to the provisions of the underlying Staff Loan Agreement.

o The Collateral Item shall be pledged in support of the

loan either at the time of the loan disbursement (if the Collateral Item is by then already in possession of the Applicant) or as soon as it has been acquired with the Staff Collateral Loan. The HR Officer shall remind the borrower to comply with his contractual obligation to register the collateral item and sign a collateral contract in respect of the Collateral Item immediately upon the asset acquisition has been formalized.

o If the Collateral Item is a real estate collateral, it shall be pledged through a Mortgage Contract and registered with the responsible authorities in the same manner as described in Section 11.