Consumer and Mortgage Credit Procedure

Bank ofAbyssh1ia
Bank of Abyssinia
Consum.er and Mortgage Credit

Procedure
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Bank ofAbyssinia
Table of Contents
CI-IAPTER ONE ............ ......................... ........................... ............................................................. I
BACKGR.OUND ................. ...... .. ..... .................................... ....... ............ ....... .. ......... ... .................. l
Consumer and Mortgage Credit Structure .................... ........... ...................................................................... 2
Cl-IAP1'ER TWO ........ ........... .. ... ............................................................................ ............... ...... ... 3
AUTHORITY AND RESPONSIB ILITY, GENERAL ELIGIBILlTY AND DOCUMENT
REQUIREMENTS ........................................ ...... ... .. ...................... ... .............................................. 3
2.1. Major Authority and Responsibility .................................................................................................... 3
2.2. General Eligibility ............................................................................................................................... 4
2.3. Required Documents and General Cond itions for Consumer and Mortgage Credil Products ............ 6
2.3. I. Document Required for Mortgage Loan---------------------------------------------------------------6
2.3 .2. Terms/Concl itions for Mortgage Loan-------------------------------------------------------------------7
2.3 .3. Terms/Conditions for Automobi le Loan-------------------------------------------------------------9
CHAPTER THREE ........... .......... ......................................................... ........................................ 10
INTERNATIONAL/ NON GOVERNMENT AL ORGANIZATIONS CONSUMER AND
MORTGAGE CREDIT ............................................................................ .... ............................ .... I 0
3.1. Scope of Application ............................... ................................... .......... ............................................. l 0
3 .2. Eligible Organizations; ................................................... ...................... .................. ........... ................ 10
3.3 . Eligible E1uployees ............................ ................................................................................................ JI
3.4. Mortgage Loan ......................... ................................. ................. .. ..................................................... 12
3.5. Auto1nobile Loan .......................... ,............................................... ..................................................... 12
3.6. Personal Loan .................................................................................................................................... 13
3.7. Lending Interest Rate ....... .. ............................................................................................................... 14
3 .8. Loan Account Treatment when a Staff resigns/ organizations terminates contract with BoA .......... 14
3 .9. Penalty Rate on early settled loan of staff of international organization/NGO ................................. 15
C.l-IAPTER. FOUR ................................... .. .................................................................................... 16
DIASPORA CONSUMER AND MORTGAGE CREDIT .................. ......................................... 16
4.1. Definition ofTenns ........................................................................................................................... 16
4.2. Diaspora Consumer and Mortgage Savings Account.. ...................................................................... 16
4.3. Terms/Conditions for Diaspora Consumer and Mortgage credit ..................................... ................. 17
4.4. Diaspora Mortgage Loan .......................................................................................................... ......... 18
4. 5. Diaspora Auto1nobile Loan ................................................................................................. .............. 19
4.6. Lending interest rate ......................................................................... ................................................. 20
4.7. Penalty Rate on the Diaspora Consumer and Mortgage Loans ......................................................... 20
CfIAPTER FIVE .......................... ................................................................................................ 22
STAFF CONSUMER AND MORTGAGE CREDIT .................................................................. 22
5. 1. Staff Mortgage Loan ........................... .. ..................... .. ............... .. .................. ......... ...... ..... ............... 22
5. I .1 . Eligi bi Iity -------------------------------------------------------------------------------------------------- 23
5.2. Staff Automob ile Loan ...................................................................................................................... 24
5.3. Staff Pers011al loan .............................................................................................................. ............... 25
5.4. Lending interest rate .............................................................................. ..................... .. .. ................... 26
5.5. Loan Account Treatment when a Staff Dies or Resigns .................~~n · · ·
5.5. 1. Loan Account Treatment When a Staff Die~ --------~ -----ff------lQg_____ ---------------------- 26
. . . . . . . . .. . . . .
26
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Consumer and Mortgage Credit Procedure Page i
Bank ofAbyssinia
CONSUMER AND MORTGAGE CREDIT FOR ETHIOPIAN RESJDENTS ......... ................. 29

6.1. Scope of Application ......................... ................................................................................................ 29
6.2. Mortgage Loan ......................................................................... ......................................................... 29
6.3. Auto1nobile Loan ............... ....................................................... ......................................................... 29
6.4. Loan interest Rate ................................................................................... ........................................... 30
6.5. Penalty rate on early settled loan ....................................................... ................................................ 31
CI-IAP'fER SEVEN ......... ....................... ...................................................................................... 32
CONSUMER AND MORTGAGE CREDIT PROCESSING AND DECISION-MAKING ....... 32
7.1. Loan Origination ............................................................................................................................... 32
7.2. Cred it Processing ............................................................................................................................... 32
7.3. Loan Amount Determination and Documentation ............................................................................ 34
7.4. Collateral Valuation ........................................................................................................................... 38
7.5. Loan Buyout ........................................................................ :............................................................. 39
7.6 Transfer of Partia l Financing Loans to Consumer and Mo1tgage Loan ........................................... .40
7. 7. Mortgage Loan Processing in the case of Residentia l Housing Construction Cooperative
Association ........................................................................................................................................ 4 1
7.7. I . If the Loan is requested to construct a Residential House:---------------------------------------- 4 1
7. 7 .2. [f the loan is requested to construct a residential apartment: ------------------------------------- 4 I
7.8. Approving Organs ............................................................................................................................. 42
CI-IAPTER EIG.E-IT ........................................... ................................... ......................................... 43
CONTRACTS, INSURANCE AND DISBURSEMENT .... ......................................................... 43
8.1 . Contract Design and Preparation ............................................. .. ........................................................ 43
8.2. Contract Formation ............................................................................................................................ 43
8.3. Contract Registration and Hanel I ing of Security Documents ............................................................ 44
8.4. lnsurance............................................................................................................................................ 45
8.5. Consumer and Mo1tgage Credit Disbursement ................................................................................. 45
Cl-lAPTER NINE .......................................................................................................................... 48
CONSUMER AND MORTGAGE CREDIT FOLLOW-UP AND COLLECTION .................... 48
9.1. Purpose of Loan Follo·w-up ............................................................................................................... 48
9.2. Loan Collection, Fol low-up, and Reporting ...................................................................................... 48
9 .2. l. Follow-up Responsibility------------------------------------------------------------------------------- 48
9.3. Monitoring of the Loan Follow-Up Activity ........................................ ..... ........................................ 50
CHAPTER TEN ....................................................................................... ...... .... .. ......................... 51
OTHER ISSUES ................. .......................................................................................................... SJ
JO.I. Exceptions/Appeal. ........................................... ................................................. ................................ 51
10.2. Repeal ................................................................................................................................................ 5 1
10.3. Effective Date .................................................................................................................................... 51
Consumer and Mortgage Credit Procedure Page ii

Bank ofAbyssinia
CHAPTER ONE
BACKGROUND
WHEREAS, the existing Consumer and Mortgage Credit Procedure requires to be
amended in consideration of the newly introduced organizational
structure and ever-changing market condition and the akin alteration in
consumer loan product need of customers;
WHEREAS, there is a need to revise the existing procedure so as to incorporate these
new additions and amendments, to provide more clarification on some
issues, to ensure fair and proper util ization of the existing credit products
and to strengthen the credit risk management;
NOW, therefore, the existi11g Consumer and Mortgage Credit Procedure is revised in
line with the Bank's Credit Policy.
Consumer and Mortgage Credit Procedure Page I

Bonk of Abyssinia
Consumer and Mortgage Credit Structure
A. Addis Ababa Area Consumer and Mortgage Credit Business Struct ure
Cbicf Executive Officer
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Chief Credit Officer
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Director- Credit
Management
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1\fr111ager - Consumer
&Mortgage Credit
* Consumer Loan Officer Brauch Manager
*Credit Administrator * Customer
* Legal officer Relationship Officer
* Collateral Valuatur .;. Others
B. Outlying District Area Cons umer an d Mo rtgage Credit Business Structure
Chief Executive Officer
Chief Brnnch Banking
Manager- District Outlying
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Manager - Distt'ict Manager- District
Business Operation
Branch Manager
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* Cus10111er Relationship Officer *Credit 1111derivriter
*Credit Administrator * Collateral Valuator
*Collateral Va/11ator(Make1) (Checker)
*Others * Others *Cus10111er
1·elMio11ship officer
; _.....~~ ...*others
....- ' ....
Consumer and Mortgage Credit Procedure Page 2

Bank ofAbyssinia
CHAPTER TWO
AUTHORITY AND RESPONSIBILITY, GENERAL

ELIGIBILITY AND DOCUMENT REQUIREMENTS
2.1. Major Authority and Responsibility

A. Director - Cred it Management and District Manager- Outlying
I. Guide and coordinate the Consumer and Mortgage Credit Business;
2. Ensure that the Consumer and Mo1tgage Credit business is executed as per the
Bank' s directions;
3. Ensure that all upcoming problems related to Consumer and Mortgage Credit are
timel y solved;
4. Ensure that Consumer and Mortgage Credit requests get timely decisions;
5. Ensure that there is strict loan fo llow-up on a case-by-case basis and ensure
quality of loans and advances ;
6. Ensure that deteriorating loans and advances get timely solutions;
7. Ensure that adequate staff: facility, training and expertise are properly and timely
provided.
B. Manager - Consumer and Mortgage Credit or Manager - District Business

(Outlying Area)
1. Guide and coordinate the overall Consumer and Mortgage Credit as per his/her
discretion;
2. Maintain existing and new customers and establish strong business relationship
with Consumer and Mortgage Credit customers of the Bank;
3. Sign Memorandum of Understanding (MoU) on behalf of the bank with
international organizations.
4. Ensure that there exists single point of contact for customers;
5. Ensure that Consumer and Mortgage Credit requests get timely decision;
6. Conduct strict loan follow-up on a case-by-case basis an~
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and provide periodic follow-up reports to the Director - ·e · . ,,.,er\t or to
the District Manager (outlying area), as appropriate; S .
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Consumer and Mortgage Credit Procedure

Bank ofAbyssinia
7. Get timely and proper solutions for deteriorating loans;

8. Ensure the legal ity of borrowers ;
9. Ensure that prope11ies offered as collateral are proper ly and tim ely identifi ed,
evaluated, periodically assessed and registered by authorized government organ;
10. Ensure that loan documents are properly maintained and updated, ownership
certificates of collaterals/pledge are properly held under custody and timely
insured;
I J. Review Consumer and Mortgage Credit portfolio and report findings to Manager-
Credit Portfolio periodically.
C. Branch Manager
l. Guide and coord inate the overall staff Consumer and Mortgage Credit
management;
2. Review staff Consumer and Mortgage Credit requests as per his/her discretion;
3. Maintain strict loan follow-up and ensure loan quality;
4. Ensure that properties offered as collateral are properly and timely identified,
eva luated, registered, insured, documented and periodically assessed;
5. Get timely and proper solutions for deteriorating loans;
6. Handover problem loans to the Loan Workout Team at Head Office or to th e
District at Outlying for further workout solution.
2.2. General Eligibility

All customers applying for Consumer and Mortgage Credit shall fu lfill the following
general eligibi Iity criteria:
1. Applicant's age shall be 18 years old and above.
2. All applicants shall have defi ned and sustainable source of income.
3. The applicant shall submit his/her request in writing.
4. The applicant shall complete the standard Cred it App lication Form designed for
the purpose.
5. The applicant shall fully disclose the consumer and mortgage loan he/she or
his/her spouse has been ente11ained with, if any, in the credjt application. Any
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attempt to conccnl information shall entail administrative measure as far as not

being enti tled to any cred it henceforth.
6. The appli cant shall fully settle any previous loss loan to the Bank, if any. To
this effect, inl'ernal records shall be thoroughly checked.
7. The applicant and/or his/her spouse shall not have non-performing loons in any
bank.
8. The applicant shall present Marriage Certificate or otherwise.
9. The maximum amount of the applicant's borrowing capacity shall be
determined based on remaining employment period, legally set retirement age,
whichever comes first.
I 0. If loan repayment is based on the applicant's salary, compulsory debt
repayment ob ligations including repaymen t of the requested loan shall not
exceed one lh ird of the applicant's basic salary. If the loan is to be extended
considering half of the applicant's salary, he/she shal l provide a written consent
all owing the bank to consider half of his/her basic salary for the repayment of
the loan(s) availed and other compulsory debt repayments including guaTantee
liability. Moreover, lhe applicant shall submit a formal letter from his/her
empJoyer slaling his/her basic pay along wit h all deductions.
11 . The bank may consider spouse)s income to enhance borrowing capacity of the
applicant and both shall be treated as a principal borrower. To be a joint
borrower, the spouse needs to have proven and sustainable source of income.
12. The applicant shall give written consent to the bank to access his/her credit
information regard ing his/her direct or indirect liability in any institutions.
13. The applicanl shall fulfill at least the required minimum equity contribution.
14. An applicant ca n be entitled to more than one consumer and mortgage credit
product at a time/over time as long as the total amount of loan requested is
within total borrowing capacity.
15. The applicanl shall pay property estimati on and loan processing fee as per the
in relation by
Consumer and Jvforlgage Credit Procedure Page5

Bank ofAbyssinia
properly estimati on and loan process.ing fee including credit information fee.
Moreover, related costs like ti tle Lransi"er fee and stam p duty shall be covered by
the bank if the borrowing capacity allows so.
16. An appl icant can construct or purchase a house/ automobile in spouse's name.
However, a loan shall not be provided for the purchase of a residential house/
automobile thal is already registered in the name of the spouse.
17. If an applicant requests to buyout the loan either in his/her spouse or his/her
name, the Bank shall process and approve a loan as per this procedure.
18. The staff applicant (of BoA) sha ll be a permanent employee who served the
Bank at least for one year. In order to attract qualified personnel for key
managerial and/or professional posts, the credil committee may, however,
decide to extend staff loan to the staff of BoA, even though her/his serv ice in
the bank is less than one year. Re-hired employees shall be considered as newly
hired one.
19. The staff applicant shall have a clean employment record, but if the applicant
commi tted discipl inary offences; he/she shall not be eligible for all types of
Consumer and Mortgage Credit until the rehab ilitation period of tbe reprimand
is elapsed, as sti pulated in the Bank's Human Resource Management
Procedure.
20. If the staff opts for further education with the intention of comi ng back to the
Bank and sponsored fully or partly by the Bank, he/s he should be treated as if
he/she is on duty for the specific period, but the monthly repayment or the loan
shal l not be interrupted.
2 1. The app.licant has to fuIfill the specific eligibility criteria for each Consumer
and Mortgage Credi t product.
2.3. Required Documents and General Conditions for Cons umer and
Mortgage Credit Products
2.3. l. Document Requ ired fo r Mo rtgage Loan
i. For construction of a house:

(a) Construction permit;
Consumer and MortgaKe Credit Procedure ~ Page 6

Bank ofAbyssinia
(b) Bill of quantity;

(c) Ownership certificate and approved plan;
(d) Lease certificate/current lease payment receipt as appropriate;
and
(e) Current land tax payment receipt.
ii. For purchase of a house:

(a) Va lid purchase/sales contract registered by an authorized
government body, except sales contract concluded with Real
Estate Companies. If the city/town, where the residential house is
purchased, does not register sa les contract before ownership title
transfer to the purchaser; the applicant shall be entettained with
unregistered sales contract until lhe loan is approved.
(b) Ownership certificate and approved plan;
(c) Current lease payment receipt, as appropriate; and
(d) Current land tax payment receipt.
2.3.2. Terms/Conditions for Mortgage Loan
J. The residential house to b e constructed or acquired by the applicant shall be

located in cities/towns where the Bank's Branch exists
2. The following could be considered as equity contribution:
a) Cash in a blocked account in one of BoA's branches for the purpose
of constructing or purchasing a residential house.
b) Cost of civil works incurred on the residential house as estimated by
the Bank's Collatera l Valuator.
c) Lease down payment or advance payment made to acquire the house
with genuine evidentiary documents that shall be verified by credjt
performers.
d) In the case of purchase of a house, the applicant's contribution
received as per the agreement.

Bauk a/Abyssinia
3. There shall be grace period fo r a maximum of two years for new construction
and/or for purchase of houses under construction and three months for
purchase of completed ho uses for the repayment of principal amount of the
loan. However, the accrned interest during the grace period shall be repaid on
monthly basis. Note that, if Lhe appl icant is willing to start repayment
immediately, the loan contract shall be made accordingly.
4. When an appli cant requests a mortgage loan for purchase or residential
building, the construction of the building shall be at least 70% (Except for
purchases fro m real estate companies and staff of BoA) completed, as per the
plan presented.
5. Fresh mortgage loan request shall only be considered upon ascertaining that
the amount of loan an applicant may get calculated based on his/her salary
and the salar y/i ncome of his/her spouse plus the equity contribution he/she
makes, enables him/her to complete at least 70% of the construction work of
a residential house, as per the plan presented.
6. When an app licant requests a mortgage loan for the purchase of a residential
house under construction, the status of the house shal l at least be easily
transferable to a tbird party with the current status, as per the laws and
regulations of the Regions or City /\dmi nistrations.
7. To purchase a house under construction, the amount of the loan granted and
the equily contri bution shall be enough to complete at least 70% of the
construction work of a residen tial house as per the plan presented.
8. If loan amount is not enough to complete the planned construction works to
the level stated above, the applicant shall raise additional equity contribution
in the form of cash in a blocked account or eq uivalent amount of construction
shall be made.
9. Without nullify ing Lhe requirements stated above, despite the level of
construction of the residential house to be purchased, the Bank may finance
both purchase and construction of the house if the applicanl has bon owing
Consumer and Morrgage Credit Procedure Page8

Bank of Abyssinia
10. lf an applicant has paid the purchase/contract value from other sources, the
Bank may refund the amount approved either directly to the applicant or any
person named by the applicant. However, the payment should have been
made/effected after the date where proper Mortgage Loan application has
been submitted.
2.3.3. Terms/Conditions for Automobile Loan
J. The applicant shall submit a valid pro forma invoice or sales contract from a
vendor/manufacturer or seJ!er, as appropriate.
2. 1f the final agreed price exceeds the amount in the pro forma invoice, the
applicant shall cover the difference.
3. The financing requirement and equity contribution of loan requests for
purchase of used car shall be determined based on sales contract price or
Mechanica l Engineer' s estimate, whichever is lower. However, if the request
is for purchase of brand new car, the invoice value shall suffice.
4 . The following could be considered as equity contribution:
a) Cash in a blocked account in one of the BoA's Branch for the purpose
of purchasing the automobile.
b) The applicant' s contribution thereto can be confirmation letter from
the sell er that the amount is received as per the agreement.
5. The equity contribution plus the loan proceed shall be paid directly to the
seller or manufacturer against a written consent of the borrower.
Consumer and Mor/gage Credit Procedure Page 9

Bank ofAbyssinia
CHAPTER THREE
INTERNATIONAL/ NON-GOVERNMENTAL
ORGANIZATIONS CONSUMER AND MORTGAGE
CREDIT
3.1. Scope of Application

This chapter addresses issues pertaining to eli gibili ty requircmcnls as well as the
necessary conditions for the provision of consumer and mortgage credits to employees
of international organ izations and others. Eligible organizations in this context
includes, Non-Governmental Organizations (NGOs), embassies, and partially or fully
government owned organizations that have presence in Ethiopia and receive funds
from foreign sources; service providers engaged in FCY earning businesses as long as
their total annual FCY earning is more than their annual FCY utilizalion.
3.2. Eligible Organizations

I. Shall open its fCY account via BoA, as the case may be, since bcginnjng of its
first remittance through the opened account lhe organization shall be eligible for
consumer and mortgage credit products.
2. Shall have depository relationship with the bank or newly recruited ones if their
performance warrants future FCY earn ing prospect and improved business
relationship.
3. The District (outl ying)/Consumer and Mortgage Credit at Head Office shall
review the FCY inflow of the organization arurnally. The bank may terminate
the CTedit serv ice il provides if the organization tenninates or reduces its
depository relationship with the Bank.
4. Shall open salary accounts of its employees in the Bank.
5. Provident fund accounts sha ll be opened and operated through BoA (if opened
in Ethiopia) unless othetwise the provident fund is pledged as collateral for
Consumer and Mortgage Credit Procedure Page JO

Bank ofAbyssinia
6. Shall provide documents/information essential for the assessment of the

organization>s employees' access to the credit service. These shall include, but
not limited to, the following:
J. Establi shment documents of the organization, as appropriate;
ii. Renewed license/permit that allows the organization to operate in the
country, as appropriate;
iii. A list of personnel authorized to deal with the Bank in connection with
the consumer credit service provision including persons authorized to
sign M emorandum of Understanding (MoU) with the Bank;
iv. A list of deposit accounts being used by the organization to channel
foreign proceeds along with name(s) of the branch(es) wherein the
accounts are kept;
v. Confirmation on retirement age policy of the organization, if any;
vi. Other pertinent information/document(s) requested by the Bank.
7. Shall sign a Memorandum of Understanding (MoU) with the Dank on the credit
service provision and administration of loans. As the case may be, letter of
undertaking by the authorized personnel shall be considered in place ofMoU.
3.3. Eligible Employees

l. Shall be an Ethiopian or non-Ethiopian residents (with respect to personal loan only)
working as permanent employee/contractual basis.
2. Shall secure mortgage, automobile and personal loan twice. However, in case of
mortgage and automobile the already taken loan shall be settled first.
3. If both husband and wife are employees of eligible organi zation(s), they are
individually entitled to al l consumer and mortgage credit products as long as one 's
salary is not considered to supplement borrowing capacity of another for similar
products.
4. Shall present undertaking letter from the organization stating:
Consumer a11d Mortgage Credit Procedure Page 11

Bank ofAbyssinia
• The wiJlingness of the organization to channel any outstanding payables

(benefits), including the provident fond to the loan account upon Lhe
termination of the employee.
3.4. Mortgage Loan

Mortgage loan shall be used for:
1. Construction of residential house;
11. Construction of additional house within an existing compound such
as service quarters or main house. as the case may be;
111. Purchase of residenti al house.
I. The applicant shall ra ise equity contribution of at least 5% of cost/value of the
house as estimated by the Bank's Collateral Valuator or the agreed upon
contract/purchase price, whichever is lower.
2. In the case of pu rchase, the maximum loan amount shall not exceed 95% of
cost/value of the house as esti mated by the Bank's Collateral Valuator or the
agreed upon cont racl/purchase price, whichever is lower. However, the loan shalJ
at no time exceed the amount determined based on half of the basic salary of the
applicant and spouse minus other obligatory debt payments.
3. The loan shall be repaid within a maximum tenure of 25 years (including grace
period, if any) or before the retirement age of the applicant, which ever comes first.
3.5. Automobile Loan

I. ls a loan granted solely fo r non-commercial purpose against the aut omobile to be
purchased.
2. Shall be repaid with in a maximum period of 10 years or the remaining
employment period before the retirement age of the applicant, whichever comes
first. No grace period shall be given for repayment of the loan.
3. The applicant shall make equity contribution of at least 10% of va lue of the
automobile for brand new and used ca rs that are manufactured in less Lhan 5 years
or 15% for used cars lhal are manufactured between 5 and 15 years.
4. The loan amount shall not exceed 90% of value of the a~.~~f!·~~~\ brand new
and used cars that are manufactured in less than 5 ye :.{ 01 8.$% J~t~u~--d car that
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Bank a/Abyssinia
are manufactured bet\veen 5 and 15 years, respectively. However, the loan at no

time shall exceeds the amount determined based on half of the monthly basic
salary of the applicant and his/her spouse (if considered) minus obligatory debt
payments.
3.6. Personal Loan

l. Is a loan granted for the purpose of covering the applicant's urgent financial
requirements like expenses for domestic or foreign travel, medical treatment of self
or family member, education fee, or any kind of personal expense.
2. The maximum amount of personal loan avai led to employees shall not be more
than his/her 12 months' sa lary or maximum allowable amount as per capac ity
determination.
3. ShalJ be secured by a staff's personal guarantee and/or the staffs provident fu nd
and/or other acceptable collateral. Nevertheless, the amount to be availed shall not
exceed 90% of the estimated value of the bui lding, 80% for vehicle offered as
collateral and 100% for provident fund or maximum allowable amount as per
capacity determination, whichever is lower.
4. T he Bank shall not, however, accept a staffs persona l guarantee if deductions,
including a guarantee's liability, from the guarantor's salary is to exceed one-third
of his/her gross salary.
5. One employee's provident fund shall not be used as collateral for other employees
borrowing.
6. The loan shall be granted for a maximum period of 7 years or the remaining
employment period before the retirement age of the applicant, whichever comes
first. No grace period shall be given for repayment of the loan.
7. Personal loan can be granted against a house which is held for mortgage loan.
However, the sum of maximum amount of personal loan to be availed and
outstanding balance of the mortgage loan shall not be more than 90% of estimated
va lue of the property held as collateral or maximum allowable amount as per
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Consumer and J\lfortgage Credit Procedure Page 13

/Jank of Abyssinia
3.7. Lending Interest Rate

I. The lending Tntercsl Jlate lo be applied shall vary depending on lhe FCY inflow to
BoJ\. by the organization as stipulated below
Amount of FCY inflow(in USD) Lending Rate (in % age)

Less than I mill ion Saving Rate +0.5%
Greater than or equal to l million Saving Rate+ 0.25%
but less than J0 million
Greater than or equal to 10 millio11 Saving Rate
2. The interest rate proposed above shall be adjusted based on th e FCY inflow within
the above range after review of the FCY earning from the organization as deemed
necessary.
3.8. Loan Account Treatment when a Staff Resigns/ Organization

Terminates Contract with BoA
L. If the borrower resigns from the organ iza tion after the loan approval but before
the first disbursement of the loan, the Bank shall automatically cancel the loan
approval decision, unless the boJTowers arc husband and wife and one of them
continues working in the organization.
2. If the borrower resigns after loan disbursement is made, the remaining loan shall
be disbw-sed as per the loan approval terms and conditions.
3. If the borrower leaves the orga nization, for reasons other than project phase-out,
the bank shall apply minimum additional rate of at Jeast5% above the agreed
lending rate on the outstanding Joan balance, starting from the date when the
employee lefi the organization. This shall be made part of the loan contract.
4. If it is the organization's stand that additional interest rate should not be
applicable on employee's resignation, the penalty interest rate might be waived
so long as the orga ni zation 's relationship with BoA is maintained. This shall be
made part of the loan contract and MoU.

Bank ofAbyssinia
5. In case of personal loan, however, if the borrower is granted the personal loan
against his/her provident fund; the loan shall be settled from the provident fund
when the employee resigns in any case.
6. If the organization terminates its relationship with BoA, the bank shall apply
prevailing maximum consumer loan interest rate of the bank on all outstand ing
loan balances of the employees of the organization. This shall be made part of
the loan contract.
3.9. Penalty Rate on Early Settled Loan of Staff of International

Organization/NGO
1. If the organization terminated its relationship with the bank and if the
borrower/employee settles the loan prior to its maturity date, the bank shall
apply penalty rate of 3% of the outstanding balance of the loan. This shall be
made part of the loan contract.
2. However, if the employee requests early settlement of the loan whi le the
organization is working with the bank, the penalty rate shall be waved.
Consumer and 1\1ortgage Credit Procedure Page 15

Bank ofAbyssinia
CHAPTER FOUR
DIASPORA CONSUMER AND MORTGAGE CREDIT
4.1. Definition of Terms
I . Diaspora means non-resident Ethiopian or non-resident foreign nationals of

Ethiopian origin that have been living abroad for at least one year and can
present resi dence and/or work permit from the country of residence.
2. Diaspora Consumer and Mortgage Savings account means local currency
savings account opened by non-resident Ethiopians or non-resident foreign
nationals of EU1iopian origin for the purpose of either purchase or constmction
of residential house or purchase of Automobile to which all deposits is in
foreign currency.
4.2. Diaspora Cons umer and Mortgage Savings Account

1. It is possible to open Diaspora Consu mer and Mortgage Savings account by an
applicant(s) in person or through his/her/their agent tlU"ough power of attorney
or through the Ethi opian Embassies if she/he/they fulfill the requirements set
herein.
2. Couples can open Joint Diaspora Consumer and Mortgage Savings account if
they can present marriage certificate.
3. The applicant shall disclose his/her and his/her spouse's address (both local and
abroad) as fol lows:
o Country, State/Province and City;
o Residence Address;
o Telephone, Postal and Emai l address;
o Social Media Accounts (Optional);
o The appli cant shall fiJl out the account opening form designed for this
purpose.
4. Diaspora Consumer and Mortgage Savings account shall be opened m all
selected branches of the Bank.
Consumer and Morlg~tge Credit Procedure Page 16

Bank o,f'Abyssinia
5. All deposits to the account shall be made in foreign currency. The applicant
shall credit the account using the following without limiting to:
o Foreign currency cash as per NBE requ irement;
o Direct credit to the account using SWIFT or via money transfer agents, or
o Transfer from Diaspora fixed time deposit an d/or Diaspora current account
but not from Non-repatriable Account.
o Full or pmiial withdrawals from Diaspora Consumer and Mortgage Savings
account shall be allowed only in local currency at any point in time.
6. Diaspora Consumer and Mo11gage Savings account can be closed when the
applicant requests so before disbursement of the loan. However, this does not
restrict the applicant from opening another Diaspora Consumer and Mortgage
Savings account.
7. Diaspora Consumer m1d Mortgage Savings account shall bear special interest
rate that is offered for this purpose.
8. Foreign currency credits to Diaspora Consumer and Mortgage Savings account
shall be converted to local currency using the Bank's daily applicable currency
buying rate at date of transaction.
9. The applicant shall submit the following documents for account opening
o Residence and/or work permit as per NBE's respective directive;
o Renewed passport for non-res ident Ethiopians or renewed passport and
yellow card for foreigners of Ethiopian Origin;
o One latest passport size photograph;
o lf applicable, power of attorney, copy of ID and 2 passport size
photograph of the agent and
o Bank Account statement from foreign sources (optional).
4.3. Terms/Conditions for Diaspora Consume r and Mortgage Credit
I. The applicant shall submit the followi ng document in addition to the required
documents stated under 4.2 items 9 herein above.
o Employment letter showing annual gross and net
employers or individual tax return, if app licable.

Bank of Aby ssinia
• However, if the nature of their job (such as baby sitters, security,

waUers, housemaids, etc. . . .) and their income cannot be
substantiated by the stated documents, they can be entertained
under the special option stated. However, the aµplicant shall
disclose in writing his/her monthly income.
o Copy of employmenl contract, if appl icable.
o Bank Account statement from foreign banks for at least one year
(Optional for Special Option users)
o If the applicant is a business ind ividua l s/he shall present:
• Financial statement at leas t for one year;
• Renewed trade license and trade registration certi ficatc; and
• Tax payment certificate.
2. The Bank shall consider one thfrd of basic salary of the applicant and his/her
spouse less obligatory deductions to determine borrowing capacity.
3. The applicant shall not be req uired to open Diaspora Consumer and Mortgage
Savings account if she/he raises the required equity contribution at one
transaction.
4. The Equity Contribution and repayments for Diaspora consumer and mot1gage
credit shall be effected in foreign currency.
4.4. Diaspora Mortgage Loan
1. Diaspora mortgage loan shall be used for:

t. Purchase of residential house and;
u. Construction of residential house or service quarters or main house in
the existi ng compound, as the case may be.
2. The loan shall be extended to be repaid within a maxi mum tenure of 20 years,
including a grace peri od or the remaining employment tenure of the applicant,
whichever is lower.
3.
enhance his/her capacity, if it could be justified
NBE directive.
Consumer and /vlortgage Credit Procedure Page 18

1Ja11k a/Abyssinia
4. if the borrower passed away before settl ing the loan and if the legal heirs are
willing to pay the loan as per the agreements made and have the required proven
source of repayment, the Bank may allow the legal heirs to pay the loan on
installment basis either in foreign or local currency. If the repayment is in fore ign
currency (FCY), the repayment period and other terms and conditions shall not be
altered.
5. The applicant shall raise at least 20% of equ ity contribution in foreign currency.
6. In the case of purchase, the maximum loan amount shall not exceed 80% of the
value of the house as per the Bank's Collateral Valuator estimation or sales
contract value, whichever is lower. However, the loan shall at no times exceed the
amount determined based on I/3rd of basic salary of the applicant minus other
obligatory debt payments if applicable. Except for purchase from ReaJ Estate.
7. If the loan amount is not enough to complete at least 70% of the planned
construction work, the appl icant shall raise additional equity contribution in
foreign currency kept in blocked account or may come with loan request after
constructing the house to the required level by channeling FCY through BoA.
8. If the loan is for construction or purchase of residential house under construction,
the equity contribution kept in blocked account may be released in phase by phase
basis as the case may be.
9. Incremental mortgage loan request of an applicant shall be entettained so long as
the required foreign currency equity contribution stated in this procedure is raised
as stated above.
10. The Bank shall entertain the first loan disbursement request of the applicant if
he/she fully invested his/her share of the equity contribution in foreign cuITency.
4.5. Diaspora Automobile Loan
1. Is a loan granted solely for non-commercial purpose aga inst the automobile to be
purchased
2. Shall be repaid with in a maxnnum period of 10 years or the remaining
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Bank ofAbvssinia
3. The applicant shall make equity contribution, in foreign currency, of at least 30%
of va lue of the automobile for brand new and used cars that are manufactured in
less thao 5 years or 50% for used car that are manufactured between 5 and 15
years.
4. The loan amount sha ll not exceed 70% of value of th e automobile, for brand new
and used cars that are manufactured in less than 5 years or 50% for used car that
are manufactured between 5 and 15 years, respectively. However, the loan at no
time exceeds the amount determined based on one third of the monthly basic
salary of the applicant and his/her spouse (if considered) minus obligatory debt
payments.
A. Lending interest rate for Diaspora Mortgage loan

1. Loan Interest rate for Diasporas whose applications are substantiated by a
standard document.
Equity contribution (i.n FCY) I nterest rate Maximum tenure(
in yca1·s)
20% Saving rate + 1.5% 15
30% Saving Rate+ 1% 20
40% Saving Rate+0.5% 20
50% and above Saving Rate+0.25% 20
2. For applicants with the nature of jobs and level of income that cannot be
substantiated by a standard document (such as baby sitters, security, waiters,
housemaids, etc .... )
Equity Coutribution Interest Rate Maximum
in FCY Tenure
50% Saving Rate+ 0.25% 15
B. Lending interest rate for Diaspora Automobile loan
The lending Interest rate for customers who purchase automobile sha ll be saving rate
+3%
4.7. Penalty Rate on the Diaspora Consumer and Mortgage Loans

1. If an applicant requests to pay his/her loan i /,l~;~?!.~~~evcy, for loans that
should be paid in FCY, the following penalty l\' Jiil\f11}'1t.\the loan.
Bank ofAbyssinia
Equity contribution Penalty interest rate Remark

(in FCY)
20% Prevailing maximum Equity contribution in this context
bank's lending rate refers to the initial down payment
30% Prevailing maximum affected plus any additional
bank's lending rate minus payments to be made in foreign
2% currency m order to switch the
40% Prevail ing maximum repayment to l.ocal currency. All
hank's lending rate minus changes to the lending interest rate
4% shall start from the last date of loan
50% and above Prevailing maximum repayment in foreign currency.
bank's lending rate minus
5%
2. The above penalty rate to be applied shall be included in the loan contract.
3. For early settlement in LCY, the bank shall apply penalty of 3% on the
outstanding loan balance. However, if the payment is in foreign CW'rency, the
penalty will not be applied.
Consumer and Mortgage Credit Procedure Page 2 1

Bank of Abyssi11ia
CHAPTER FIVE
STAFF CONSUMER AND MORTGAGE CREDIT
5.1. Staff Mortgage Loan

1. Staff Mortgage Loan is a loan granted for:
a. Construction of residential h ouse;

b. Construction of additional house within the same compound such as
service quarter or main house as the case may be;
c. Modification (renovation, rehabilitation or expansion) of existing
residential house which adds value to the residential house;
d. Purchase of residential house.
2. The loan shall be extended for a maximum tenure of 25 years (including a

grace period) or the remaining employment tenure, which ever is lower.
3. When an applicant requests a mortgage loan for the purchase of residential
building, the construction of the building shall be at least 50% completed, as
per the plan presented.
4. Fresh mortgage loan request shall only be considered upon ascertaining that the
amount of loan an app licant may get calculated based on his/her salary and the
salary/income of his/her spouse plus the equity contribution he/she makes,
enables him/her to complete at least 50% of the construction work of a
residential house, as per the plan presented.
5. When an applicant requests a mortgage loan for the purchase of a residentia l
house under construction, the status of the house shall at least be easily
transferable to a third party with the current status, as per the laws and
regulations of the Regions or City Administrations.
6. To purchase a house under construction, the amount of the loan granted and the
equity contribution shall be enough to complete at least 50% of the
construction work of a residential house as per the plan presented.
7. If Loan amount is not enough to complete the plannec.l,s;.onstt,li~ion works to the
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level stated above, the applicant shall raise additi n~l~i ~§tff~~~o1
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Bank ofAbyssinia
form of cash in a blocked account or equivalent amount of construction shall be

made.
8. Without nullifying the requirements stated above, despite the level of
construction of the residential house lo be purchased. the Bank may finance
both purchase and construction of the house if the applicant has borrowing
capacity. However, the required equity contribution shall be determined for
both purchase and construction.
9. Transfer of the Litle deed shall be completed witl1in one year from the date of
loan disbursement. If not, the Bank shall handle the case as follows;
a. If not transferred within one year, the Bank shal l appJy 3% (three
percent) penalty interest rate on the Staff Mortgage Loan therein. In view
of this, the consent of the borrower shall be incorporated in the Staff
Mortgage Loan contract beforehand.
b. If not transfened within two years, the Bank sha11 raise the penalty
interest to 5% (five percent) on the Staff Mortgage Loan. This shall be
applicable to the staffs already entertained with Staff Mortgage Loan but
not finalized the title deed transfer till now. This shall be included in the
loan contract.
5.1.1. Eligibility
l. The staff shall pay equity contribution of at least 5% of the cost of the residential
house (purchase or construction or modification).
2. If staff has excess borrowing capacity, due to increment of his/her salary, he/she
may take incremental staff mortgage loan.
3. incremental staff mortgage loan shall be requested to comp lete the unfinished
works of the building or to construct additional bui lding within the same
compound in accordance with the presented plan, as per the estimation made by
the Bank' s Collateral Valuator.
4. Incremental mortgage Joan requests shall be treated on the basis of salary/income
growth of the staff and/or his/her spouse or avaiJabilit ,.,,,ef-::~9Ti'rffil \
. ed capacity.
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However, growth in the earnings of the spouse alone (if the spouse is not an
employee of the BoA) shall not be considered for incremental loan requests.
5. When a staff applies for additional Joan to rehabi litate works in his/her
compound, the following shall be fulfilled
a. The staff shall present documents as it 1s required in the case of
construction loan request (i.e., bill of quantity and specification,
construction permit, etc .... )
b. The staff shall make an equity contribution o f at least 5% from the total
cost of additional construction, as estimated by the Bank's Engineer.
c. The incremental loan amount plus the equity contribution made sha ll
complete at least 70% of the construction work as per the presented p lan;
otherwise the applicant shall raise additi onal equity contribution in the
form of cash in blocked account or may come with loan request after
executing part of the construction work to the required level.
6. If the mortgage loan has been granted to a staff without considering his/her
spouse's income, he/she shall be eligible for incremental loan request against the
staff spouse's salary/income, regardless of his/her salary increment.
7. Incremental staff mortgage loan, disbursed in Jump sum to the borrower's
account, sha ll not, at any time be more than 25% of the estimated value of the
building (at its construction level) less the 5% equity contribution. However, if
the incremental loan amount to be approved is more than 25%, the
disbursement of the incremental loan sha ll be done in phases as the case may
be.
8. Claims on reimbursement of periodic payments made owing to the availability of
extra employment period shall not be accepted.
5.2. Staff Automobile Loan

1. It is a loan extended solely for non -commercial purpose against the automobile
to be acquired.
2.

Bank a/Abyssinia
3. Equity contribution of at least 10% of value of the automobile for brand new
and used cars that are manufactured in less than 5 years or 15% for used car that
are manufactured between 5 and J5 years shall be raised.
4. The loan amount shall not exceed 90% of value of the automobile(for brand
new or used cars that are manufactured in less than 5 years) or 85% (for used
car that are manufactured between 5 and 15 years, respectively) as estimated by
the bank's collateral valuator or sales price whichever is lower. However, the
loan at no time exceeds the amount determined based on half of the monthly
basic salary of the applicant and his/her spouse (if considered) minus obligatory
debt payments.
5.3. Staff Personal Loan

1. It is a loan avajled to an employee for personal matters.
2. This request can be entertained against personal guarantee or any acceptable
collateral. The Bank may not, however, accept a staffs personal guarantee if
deductions, including the guarantee liab ility from the guarantor's salary, are to
exceed half of his/her gross salary. More than, one personal guarantee could not be
accepted.
3. If the loan is requested against personal guarantee, it shall not exceed the
employee's gross salary of eight months to be repaid within a maximum period of 7
years or remaining retirement age, whichever is lower.
4. If the staff could present a building as collateral in the name of the staff or spouse,
the loan can be extended to a maximum of 25 years or remaining retirement age,
wh ichever is lower. Nevertheless, in this regard, the maximum loan amount shall
not exceed 90% of the value of the building or maximum allowable capacity,
whichever is lower.
5. lf the staff could present a vehicle as collateral in the name of the staff or spouse,
the loan can be extended to a maximum of 80 % of the value of the vehicle, or
maximum allowable borrowing capacity, whichever is lower. In this case, the loan
shall be paid within a maximum period of 5 years.
Consumer and /vlortgage Credit Procedure Page 25

Bank of Abyssinia
6. If tbe staff personal loan lo be approved is determined based on the remaining

retire ment period of the staff and if building is offered as collateral, a spouse's
income shall be considered while determining the maximum allowable staff
Personal Loan. However, if the spouse is not an employee of the Bank, the
maximum amount of add itional loan, based on the spouse's income, shall not
exceed the amount of loan to be granted for the staff member on the basis of his/her
sa lary.
7. Collaterals held for other types of loan by BoA can also be cross co llateralized as
the case may be. Nevertheless, in this regard, the sum of the loan previous ly taken
and persona] loan shall not be more than 90% of the estimated collateral value of
the building and 80 % of the value of the vehicle.
8. Taki ng Staff Mortgage Loan and Staff Personal Loan simultaneously by presenting
other buildings either in the staffs own name or his/her spouse is allowed.
9. Taking personal loan by presenting two separate residential houses at a time is
allowed.
10. Grace period is not allowed for Staff Personal Loan.
11. The loan processing, approval and follow-up, except statements made herein, shall
be treated as staff mortgage loan.

The lending interest rate to be applied on all staff consumer and mmtgage credit
products shall be saving rate of the bank.
5.5. Loan Account Treatment when a Staff Dies or Res igns

5.5.1. Loan Account Treatment When a Staff Dies
1. For mortgage and personal loan, if the deceased had either one or both credit
product backed by one or more collateral, the lending Branch/Consumer and
Mortgage shall propose write-off action for the remaining outstanding balance
and forward to the Loan Workout/District Credit Committee (outlying) for
approval. In due process, there is no need lo fo llow the write-off procedure,
however, the outstanding debt shall be written-off' ~~~~K~~~j~~ns a lready held

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by the Bank
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Consumer and 1\!fortgage Credit Procedure Page 26

Bank ofAbyssinia
2. After cnsurLng that a write-off decision is passed, lhe ownership ce1tificate shall
be delivered to the legal heirs of the borrower.
3. If he/she is the only principal borrower, the lending Branch/Consumer and
mortgage cred it shall proceed as per item (1) above. However, if either of the
principal borrowers is alive, write-off proposal shall be instigated only for the
proportion of outstanding Staff Mortgage/personal Loan backed by the
repayment capacity of the deceased borrower. The residual outstanding Joan
balance shall remain active to be repaid as per the loan contract signed. The
repayment period and other terms and conditions sha ll remain intact.
4 . If the staff has more than one mortgage and personal loan backed by different
collateral (bui lding) the banks opt to write off the remaining outstanding balance
of the single credit which is granted first. However, if the legal heirs are willing
to pay the outstanding loan of the other loan as per the agreements made and has
the required proven source of repayment, the Bank may allow th e legal heirs to
pay on installment basis, the repayment period and other terms and conditions
shall remain intact.
5. For Automobile Loan and Personal Loan backed by vehicle, when the appl icant
passes away the outstanding balance of the loan shall be settled from sales
proceed of the col lateralized vehicle, which is to be confiscated as soon as the
applicant passes away. However, if the legal heirs are willing to pay the loan as
per the agreements made and has the required proven source of repayment, the
bank may allow the legal heirs to pay on installment basis, however, the
repayment period and other terms and conditions shall remain intact.
5.5.2. Loan Account Treatment when a Staff Resigns
1. When a staff resigned after loan approval and before the first loan disbursement,
the Bank shall automatically cancel the loan, unless the borrowers are husband
and wife and one of the spouses is stilJ working in the Bank.
2. When a staff res igned after disbursement is made, the remaining loan shall be
disbursed as per the stipulated terms and conditions
Accordingly, the loan account shall loan
category with the corresponding interest rate thereof.
Consumer and Mor/gage Credit Procedure

Bank q[Abyssinia
3. When a staff resigns after serving the bank at Jcast for five years, the interest
rate on all consumer and mortgage loans shall remain the same i.e. the
prevailing saving interest rate. Otherwise, the interest rate shall be raised to
saving interest rate p lus 3%.
4. If a husband and wife are both principal borrowers and if only one of the
spouses Left the Bank, the lending interest rate shall remain same.
5. If one of the spouses, who served the bank for less than five years, left the Bank
and if he/she is the principal bonower, whereas the one who is still working in
the Bank is not joint borrower, the interest rate shall be raised to saving interest
rate pl us3 %. However, if the spouse, who is still working in the Bank, requests
to maintain the loan with minimum existing lending rate, the loan contract and
the loan record shall be amended to make the existing staff principal borrower
as per this Procedure.

Bank ofAbyssinia
CHAPTER SIX
CONSUMER AND MORTGAGE CREDlT FOR
ETHIOPIAN RESIDENTS
6.1. Scope of Application

This chapter addresses issues pertaining to specific eli gib ility requirements as we ll as
the necessary conditions for the provision of consumer and mortgage credits to
applicants other than employees of Internationa l organjzations/NGOs, Diasporas and
staff.~ o:f BoA.
6.2. Mortgage Loan

I. Mortgage Loan this is a loan gra11ted for construction and/or purchase of residential
house;
2. The loan shall be extended for a maximum tenure of 15 years (including a grace
period) or the remaining employment tenure of the applicant, whichever is lower.
3. The applicant shall pay equity contribution of at least 50% of the cost of the
residential house (purchase or construction), if it is in local cwTency. Nonetheless,
for applicants who have the opportunity to raise their equity in foreign currency,
the required equity contribution shall be reduced as the case may be.
4. The lending interest rate for customers who purchase/construct residenti al house
sha ll be maximum consumer loan interest rate of the ban k, if the equity is in local
currency. Nonetheless, for applicants who have the opportunity to raise their
equity in foreign currency, the lending interest rate shall be reduced as the case
may be.
5. T he Bank shall consider one third of basic salary of the appli cant and his/ her spouse
less obligatory deductions to determine borrowing capacity.
6.3. Automobile Loan

I. Aut omobile loan shall be granted to applicant for financing acquisition of brand
new cars whose date of manufacture is not beyond l 0 ye!!~~..J1:91~he date of
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Consumer and Afortgage Credit Procedure Page 29
Bank a/A byssinia
2. The Bank shall consider one third of basic salary of the applkant and hi s/her
spouse less obligatory deductions to determine borrowing capacity.
3. The maximum Joan repayment period sha ll be 8 years or the remaining
employment period before retirement age, which.ever comes first. No grace
period shall be given for repayment of the loan.
4. T he applicant shal l make equity contribution of at least 50% of the Invoice
Value of the brand new car. If the applicant contributed the equity in foreign
currency, the required percentage shall be reduced.
5. The applicant should have cumulative work experience of at least two years . If
the appli cant is businessperson/self-employed, he/she needs to submit financial
statement for at least two years.
6. The appl icant shall deposit the required eq uity contribution in the branch where
his/her account is maintained, so that the Bank will pay the tota l amount to the
supplier together with the approved amount of loan up on written consent of the
applicant.
7. The lending interest rate for customers who purchase automob ile shall be the
maximum consumer loan lending rate. If the equity contribution is in foreign
currency, the interest rate shall be reduced proportionately.
6.4. Loan Interest Rate

I. Applicant who can effect the equity contribution in fore ign currency shall be
treated as fo llows.
If equity contribution is in FCY and repayment
is in LCY
E quitv contribution (in FCY) ln tercst rate
30% Saving rate+ 5%
40% Saving rate +3%
50% and above Savinp; rate + l %

Bank of Abyssinia
2. Applicants who do not have FCY source but have purchase/sa les contract with
Real E state Company that partners with BoA.
If Equity contribution ancl repayment is in
LCY
Equity contribution Interest rate
40% Saving rate + 11%
45% Saving rate + l 0%
50% and above Saving rate +9%
6.5. Penalty rate on early settled loan

If the borrower settl es the loan prior to its maturity date, the bank shall apply penalty
of 3% on the outstandiog balance of the loan. However, fo r those customers who are
interested in settling their loans in FCY, th e penalty rate sha!J be waived, i.e. no
penalty shall be applied.

Bank ofAhvssinio
At=::
CHAPTER SEVEN
CONSUMER AND MORTGAGE CREDIT PROCESSING
AND DECISION-MAKING
7.1. Loan Origination

J. The applicant shall apply for consumer and mortgage Joan either al branch where
applicant' s account is maintained or at the Consu mer and Mortgage Credit or at
District (in outly ing), as appropriate.
2. The Joan processing and approval of mortgage, personal and automobile loan
requests of all applicants shall be made at Consumer and Mortgage Credit in Addis
Ababa and District (outlying areas).
3. Consumer and mortgage credit applications or staffs of 13oA and employees of the
US Embassy and affi )jated companies shall be received, processed, disbursed and
followed-up at the respective or BoA's US Embassy Drancb as the case may be.
Nevertheless, the approval shall be handled at the Head Office or outlying districts.
4. When an eligible international organization has opera tions in more than one
city/Lown and e mployees apply for loans al lheir respective locations, the
District/Consumer and Mortgage Credit center at which she/he is currently residing
sha ll hand le th e request in consultation with the D istrict/Consumer and Mortgage
Credit center w ith which the MoU is signed.
7 .2. Credit Processing

I. The Customer Re lationship Officer/Consu mer Loan Officer/Branch Manager/
Custo mer Relationship Manager at District (outlying area), as the case may be shall;
a. Collect complete set of the required documenls/information, including credit
in formation report from Management Information System;
b. Collect collateral valuation report;
c. interview the applicant and fill out the predefined formats ; and
cl. Forward the documents and/or information for a pproval.
2. On the basis of the ~nfor~1atio~ gathered through the intcrvi1;,~:~~t~~Jf\ applicants,_
the Customer Relationship Officer/Branch Manager sh<'ll l fo( ,...~rd '~Ol~_p\te set of
~ .I ,,\r.,\ \
l Consumer and Mortgage Credit Procedure

Bank ofAbyssinia
documents to Consumer and Mortgage Credit at H.O or to Manager-District

Business in outlyi ng, as appropriate for approval.
3. The Consumer and Mortgage Credit Center/District (in outlying) shall verify the
legal personality of the organization and th e duties and responsibiljties vested on the
trustees as well as personnel who manage the organization, as appropriate.
4. The approving organs shall send the loan file of staff app licants to the Branch by
maintaining copy of the documents, for disbursement and subsequent follow-up.
5. When the borrower is not eljgible, th e Customer Relationship Officer/Consumer
Loan Officer/Customer Relationship Manager may reject a borrower's credit
applicati on in consultation with Branch Manager/Manager-Consumer and Mortgage
Cred it /Manager District Busi ness (at outlying), as the case may be.
6. Loan Approval Form (LAF) origination shall be done when any of the following
situations arise;
i.A fresh credit request;
ii. Legal actions;
iii. Events that necessitate changes in the decisions of credit approval,
alterations of loan amounts, collateral, interest rate, maturity period,
grace period or initiation and suspension of legal action;
iv. Other credit-related issues.
7. Having ascertained that the supporting documents are complete, the Customer
Relationship Officer/Consumer Loan Offi cer/Customer R elationship
Manager/Branch Manager shall make a tick mark 11
'1" to indicate same on the
checklist that is to be attached to the LAF.
8. AH credit documents to be presented for credit decisions shall be either originals or
copies tJ1at have been checked against the originals. If the original cannot be retained
by the Customer Relationship Officer/Consumer Loan O ffi cer/Customer
Relationship Manager/Branch Manager, he/she shall write or stamp " Clleclcerl
against Original" and put his/her signature and the date on each copy.
9. The Customer Relationship Officer/Branch Manager/Customer Relationship
..."""... r.c-•~
Manager/Consumer Loan Officer, as appropriate, shall fsfrift.illn·~;the-;,. location,

existence and condition of the collateral to be estimated '1a&. t1·~·;~:d'·:iile'\~e/suired
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documents to the Consumer and Mortgage credit or District offices, as appropriate

for valuation. The respect ive Man agers shall assign Collat era l Valuators.
I0. The Customer Relationship Officer/Consumer Loan Officer/Branch Manager/
Customer Relationship Manager evaluates fulfi llment of eligibility criteria then
recommend and forward to the respective decision making organ .
I I. All Consumer and Mortgage Credit shall be decided by the appropriate approving
body as per th is Procedure.
12. All recommendations and credit decisions shall always be accompanied by valid
reasons.
13. Members of the appropriate approving organ shall sign on all copies of the Loan
Approval Form.
7.3. Loan Amount Determination and Documenta tion

The total monthly debt payment obligations to the employer organization and/or other
institutions including guarantee obligation shall not exceed half or one third of the
applicant's basic monthly salary, as appropriate. In case where the spouse's salary is
considered, the repayment obligation shall not exceed half or one th ird of the couple,s
total basic salary. These payments do not, however, include Income Tax and Pension
Deductions, Labor Union Contributions and Savings. 1lowever, if the spouse salary is
more than the applicant's salary, the applicant's salary will be the ceiling.
The maximu m amount of the applicant's borrowing capacity can be calculated as
follows:
Let:
1. "L" be the maximum amount of loan to be granted to an applicant.
11 . "X" be half or one third of the basic salary of an applicant Jess the
summation of obligatory deductions such as loan repayments,
guarantee liability, if any, etc. However, the obligatory deductions do
not include Labor Union Conlributions, Income Tax and Pension
deduction and Savings.
iii. " Y" be the number of months over which the loan shall be amortized.
This is a maximum tenure speci ried under ~r~61;f~~xr and mortgage
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Consumer and /vfurtgage Credit Procedwe Page 34

1Ja11k of Abyssinia
credit producl lypes or the remaining employmenl period. whichever is

lower, inc.lud ing the grace period (if any).
1v. ·'I" be !he monthly interest rate which is the lending rate as per lhe
terms and tariffs of the bank fo r specific product divided by 12.
v. "A" be Lhe discount factor which is calculated as:
A.= [1 - (1 + 1)-Y]
I
Therefore, the maximum amount of the loan shall be: L =AX
I . Jf the appl icant is a staff, in order to enhance his/her repayment capacity, and
requests in writing for settlement of Employee Salary Advance and/or BoA
Credjt Association Loans from the proceeds of the requested loan and the loan
to be approved is sufficient to settle all loans, then the repayment amount of the
debt(s) shal l not be considered as deduction in calculating "X'' in the formLLla L
= AX. No olher debt commitments shall be settled from the proceeds of the
requested loan. Any commitment shall du ly be deducted from half of basic
salary of the staff and/or spouse whilst determ ining the borrowing amou11t
resulted from the borrower/s income.
J. l. Settlement of staff applicant Salary Advance and/or BoA Credit Association
Loans from the loan proceeds is allowed if the applicant's staff half of the
basic salary is insufficient to cover the required monthly loan repayment
calculated as per this procedure. Moreover, the total requested Loan
amow1t including the Employee Salary Advance and/or Loans from BoA
Credit Association (wh ich wi ll be settled from the loan proceed) shall not
exceed the estimated value of the building/vehicle determined by the
Bank's Collateral Valuator less equity contribution.
1.2. The Bank may include the cost of title deed transfer fee and stamp duty
charges, for building and automobile loan, in detennining the total staff
consumer and mortgage credit amount if and only if the staffs including
his/her spouse half of basic salary is sufficient t ~tne ~quired loan
"~~. ·. "•
repayment.
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Consumer cmd Mortgt1ge Credit Procedure Page 35
,.
/Jank ofAbyssinia
1.3. A staff could request partial settlement of the Employee Sa lary Advance
and/or Loans from BoA Credit Association from the loan proceed to the
extent that could be enough to en hance the repayment capacity.
2. Settlement of Automobile Loan commitment, if any, from lhe proceeds of
mortgage loan is not allowed and the vice versa is also not allowed. Therefore,
Automobil e Loan repayment commitment shall duly be deduc ted from half of the
applicant's basic salary while determining the boITowing amount.
3. The Bank may consider the applicant spouse income if the applicant income is
insufficient to cover the cost of residential building to be purchased or constructed
and Automobile to be purchased. However, the following requirements shall be
ful.filled ;
i. The borrowing amount of the couple shalJ be determined by adding up the net
loan capacity of the couple. The borrowing capacity of the spouse shal l be
determined as p er conditions stipulated. The combined borrowing base of the
co uple sha ll justify repayment of the loan within the repayment period. However,
the maximum loan to be approved shall not exceed two fold of the amount of the
loan to be granted for the applicant on the basis of his/her salary.
ii. The maximum repayment period of the loan shall be determine d by considering
the lower of the number of years left for retirement of the applicant or his/her
spouse if both are salaried.
iii. If the couples are employees of BoA and there is at least five years difference
between their retirement ages, the loan repayment period shall be determined
separately for each borrower and the repayment amount shall be set regressively.
iv. In case the spouse of the applicant is a businessperson, the number of months
over which the loan to be amortized shall be determined by considering the

remaining employment tenure of the applicant.
4. The applicant shall submit the specific documents listed under, as needed,
A Jetter from the organization indi cating the following information:

Bank ofAbyssi11ia
d. The organization 's consent to notify the Bank in writing when the
applicant tenninates employment contract;
e. Declaration from employer giving details of income and statutory/all
deductions which is duly signed by authorized signatory of the
organization; or latest acknowledged income tax r eturn ;
f. Identification card/Residence-Identity Card (residential or
employment), driving li cense or passport;
g. One latest passport size photograph; and
h. Tax clearance (for non-staff applicants except for those working in
international organ izations & NGOs) when appropriate.
5. The following evidentiary documents shall be presented when considering spouse
for loan determination;
5.1. If the spouse of the applicant is an employee of government or private
organization, letter from employer specifying;
a) The spouse is currently an employee of that organization;
b) His/her age. years of services in the organization and the number of
years left for retirement;
c) Basic salary and list of compulsory debt repayments;
d) An employed spouse shall have at least one year of work
experience either with the current or different employers;
e) Tax clearance (if the spouse is not staff of BoA), when appropriate.
5.2. If applicant's spouse is an employee of an Int'! Organization and NGO
which is licensed and registered with the Ministry of Justice, he/she shall
present the fol lowing evidentiary documents:
a) The spouse is a permanent employee of the organization. However,
if the employment modality of the organization is on a specific
contract basis period, same shall be accepted;
b) His/her age and the number of years left for retirement;
c) Basic salary and list of compulsory debt repaym~nts ;
d) An employed spouse shall have at J~Mf~'ii~ of work
experience either with the current or diF~fe~;t~)rsj
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e) Tax c learance when appropriate.

5.3 . If the spouse is a businessperson, he/she shall stay in business at least for
one year and present the follow ing:
a) Renewed trade license;
b) Tax Identifi cation Number;
c) Tax payment receipts at ]east for one year;
d) Tax clearance cettificate;
e) CCR/provisional/audited financial statement for one year.
f) The income of the spouse to be considered shall be compared with
his/her declared income for tax payment purposes as evidenced by tax
receipts;
g) The net income determined shall be used to supp lement the borrowing
capacity of the applicant to take a loan that w ill be sufficient to
acquire/construct residential building or automobile;
6. The spouse shall be a joint borrower and signs all necessary loan contracts along
V\rith the applicant.
7. The applicant shall sign an undertaking contract to collect and effect the periodic
repaym ent of the loan on his/her spouse's behalf. Bes ides, the applicant shall give
his/her consent to the Bank to collect the periodic loan repayment from bis/her
salary. This shall be made pmt of the loan contract.
7.4.Collateral Valuation
1. The Collateral Valuator shall provide the engineering estimate of the house to
be constructed, rehabilitated, purchased or Automobile to be purchased based
on the Bank's Collateral Valuation Manual. The Collateral Valuator (Checker)
shall also c heck t he valuation accordingly.
2. No need to estimate the value of the condominium house on the following
conditions:-
a. If the applicant is awarded with a condominium house and requests for
l Consumer and Mortgage Credit Procedure Page 38

Banko/Abyssinia
b. If the legal restriction period to sell the condominium building is not

elapsed.
In all these conditions the Bank shall consider the original contract or transfer price set
by the City Governments or Regional Governments.
3. Condominium house could be estimated by the Bank's Collateral Valuator if the
legal restriction period to sell the condominium building is elapsed (i.e. after
five years of the first purchase contract in Addis Ababa City Administration, or
three years after first purchase contract in Regional states or as stated on
relevant regulations, and if the applicant requested mortgage loan for purchase
of the same.)
4. In case of purchase of a building or Automobile, the amount of financing shall be
based on the purchase agreement made between the buyer and seller. However, it
shall not exceed the estimated value of the building/Automobile made by the
Bank's engineer less equity contribution.
No Description Computation Basis

- ···- ···-1-··--····-··- ·••>k·-····-···--··•- •>< ..•·- •>•M-••··---·--···-·-··-···- ··- - -..--··-·-······-······--···-··--··..- -........,_,,,_ •<•-•Oo<OO< ,<O----·· ·-·-·--··-· ··~·--· ·-·-· ···-··-·-·-• ·•••••
Purchase of a house /used The Bank's engineer estimation or agreed upon price
1
_ . . . ,,~.~~~()-~~o-~!c;: ___ .. . . . _ ..... ............... .... ·-~n.!!!..~. -~·~!~~-<'.~~!.@?.~..!:_t'.~~1.~~~~ 1._wh ic._~~Y..t:?~-~s_.! ~".v..~1: ... .
Construction and . . .
2 M d'fi . The Bank's engmeer esttmat10n
o 1 cation
3 Brand new Automobile Commercial invoice
Real Estate house where
4
BoA has partnership Contract/sales value
5. When the applicant requested subsequent disbursement for the building under
construction, the lending organ shall request in writing for the valuation of the
construction in progress.
7.5. Loan Buyout

Loan Buyout is a type of arrangement wherein the bank buys loans from other banks.
It is applicable when
• An applicant requests to transfer his/her Consumer and ~ .. ortgage loan which
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was avai led by other bank or 1,t\•"''~'

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Consumer a11d Mortgage Credit Procedure Page 39

Bank a/Abyssinia
• A residential house/ Automobile purchased is held as collaternl in other banks

and if the applicant requests to transfer/purchase such type of loan.
Eligibility
For ease of implementation, the foll owing activities shall be undertaken while
buying the loan:
t. BoA checks whether the collateral is pledged as a second degree or not and
the existence of any injunction order.
11. The Consumer Loan Officer/Customer Relationship Officer/Customer
Relationship Manager shall collect all the necessary documents and obtain
legal advice, if deemed necessary.
HI. The BoA and the would-be customer shall conc lude loan and
mottgage/pledge contracts (if any).
iv. The loan-selling bank shall provide undertaking letter to BoA that it would
release original title deed certificate/ownership booklet and other
documents held along with the letter or loan settlement.
v. The BoA issues Cash ier' s Payment Order (CPO) for settlement of the
outstanding loan and the accumulated interest.
vi. The selling bank shall deliver original title deed certificate/ownership
booklet and confi rmation letter of full settlement of the debt addressing to
the registering organ.
vii. The collateral shall be registered at first degree right to the B oA by the
registering organ.
7.6. Transfer of Partial Financing Loans to Consumer and

Mortgage Loan
I. The title deed/ownership booklet of the residential house/Automobile purchased
from the Bank shall be transferred in the name of the buyer (staff);
2. The buyer has been financed by the Bank as per the Paitial Financing Procedure of
the Bank;
3. The loan amount shall be determined based on the w ining,,Dxic.e... nd borrowing
r~.o.(\. ..,, ,'\:t•
capacity, whichever is lower. However, the Bank shall nof-t~~ju.lf~~.n art of the
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Bonk ofAbyssinia
down payment but the full amount of the down payment shall be considered as an
equity contribution.
7.7. Mortgage Loan Processing in the Case of Residential Housing

Construction Cooperative Association
If the residential house to be constructed is developed or to be developed by housing
cooperatives, it shall be handled as follows:
7.7.l. lf t hc loan is requested to construct a Residential House:
i. There shall be a specified plot of land (whether construction started or not)

al lotted Cor construction in the name of the applicant or his/her spouse,
which shall be confirmed by the cooperative and/or appropriate
government organ.
ii. There shall be appropriate plan an d 0\.\1nership certificate in the name of
the cooperative/association or the applicant himselti'herself or his/her
spouse.
iii. If the plan and ownership certificate are in the name of the cooperative,
copies shall be retained until individual ownership certificate is produced .
iv.The applicant shall present minutes of agreement signed by three fo urth of
the members of the cooperative/ association that authorizes member to
mortgage the house, with a covering letter of the Chairperson sealed by the
CooperaUve/Association stamp.
v . All due lease payments or Land taxes shall be paid before approval of the
loan.
7.7.2. If the loan is requested to construct a residential apartment:
If all members of a cooperative are sta ff of Bo/\ and request loan lo construct a
residential apartment, th e individual applicants shall be eligible for financing.
Co11s11111er and Mortgage Credit Procedure Page 41

Bank of Abyssinia
7.8.Approving Organs
The decision of all consumer and mortgage credit request shall be made as follows:
A. Ad dis Ababa Arca District
Approving Organ Discretion

•All Consumer and M011gage Credit requests of employees
under AA city district
• All Consumer and Mortgage Credit requests of non-staff
Consumer and Mortgage
applicants; Diaspora; staff of Lntcrnational organization&
Credit committee
NGOs working under AA city District
•All Consumer and Mortgage Credit requests of the members
of the district credit committee (outlying)
Head office credit • All Consumer and Mortgage Credit requests of the members
committee of the consumer and mortgage credit committee
B. Outlying Districts
Approving Organ Discretion

•All Consumer and Mm1gage Credit requests of
employees under outlying districts
• All Consumer and Mortgage Credit requests of non-
District Credit Committee
staff flpplicants; Diaspora; staff of lntemational
organization & NG Os work ing under outlying
district

Bank ofAbyssin;a
CHAPTER EIGHT
CONTRACTS, INSURANCE AND DISBURSEMENT
8.1. Contract Design and Preparation

1. Contract refers to both loan contract and security contracts.
2. The Bank shall usc standard contract forms. However, attorneys of the bank
shall design tailor made contracts as per the terms and conditions of the credit
decision when the need arises.
3. For staff applicants, the Customer Relationship Officer at the Branch shal l be
responsible for entering particulars of borrower(s) and contract terms
4. The Branch Manager shall be responsible for checking and assuring the contents
of the contract of the staff applicants as per the approval.
5. For the non-staff applicants, the Legal Officer shall be responsible for entering
particulars of borrower(s),checking and assuring the contents of the contract as
per the approval
8.2. Contract Formation

l. For staff applicants and US Embassy employees, the contract shall be signed by
the Branch Manager on behalf of the Bank with the respective borrower and/or
mortgagor/guarantor.
2. The loan contract of the Branch Manager shalI be made by the Manager Branch
Business of the Branch on behalf of the Bank with the Branch Manager (the
borrower) and/or mortgagor/guarantor.
3. Consumer Loan Officer/Customer Relationship Manager shall sign Contract on
behalf of the bank at Consumer and Mortgage Credit and District (outlying)
respectively.
4. Lega l Officer shall sign after confirming the fu lfi llment of the contents of the
contracts.

Bank of Abyssinia
6. If the borrower and/or mortgagor is an illiterate or visually impaired person,

h is/her hand thumb impression (linger prints) shall be jmpressed in all the
documents.
7. Parties to the contract shall sign throughout all conh·act documents.
8. After the contracts are correctly prepared and signed, revenue stamps must be
affixed to each original contracts and stamp duty charges must be collected rn
accordance with the prevailing terms and tariff book of the Bank.
9. Where stamp duty charge is coll ected by the collateral registry organ, document
evidencing the same shall be retained by the Bank.
l 0. Contracts shall be prepared at least in four copies and the original one shall be
kept in safe custody after getting signed and registered.
8.3. Contract Registration and Handling of Security Documents

I. The Customer Relationship Officer!Branch Manager (at Branches), Consumer
Loan Officer and the Credit Administrator are responsible for effecting the
registration of the security contracts and collecting them.
2. The Legal Officer/Customer Relationship Officer shaJI ensure whether th e
security contracts are duly registered and ascertained that the Registrar Office
has retained copies of the documents.
3. The original certificates of ownership of the collaterals and insurance policy
must be kept in the safe custody of the Bank.
4. The Branch Manager (at Branches)/Customer Relationship Officer or the
Credit Administrator shall be responsible for proper follow-up of the expiry of
statuary period of contracts.
5. Security contracts shall be registered with the concerned Registrar Offices:
6. At branch, original loan, security and insurance policy documents shall be
maintained under the control of the Branch Manager.
7. At Consumer and Mortgage Credit/ District Office (outlying) original loan,
security and insurance policy documents shall be maintained under the dual
control of two credit administrators.
. . .......
Bank of Abyssinia
8. Brief particulars of contractual and security documents shall be recorded in a

register book or secLLrity lodg ment book prepared for the purpose.
8.4. Insura nce

I. Before disbursement of the loan, the Ba nk shall secure appropriate insurance
policies for all insurable securities where the Bank is explicitly included as first
degree co-beneficiary. Insurable securities include buildings, houses,
automobile, etc.
2. The Branch Manager/designated Consumer Loan Officer/ Credit Administrator
or the Customer Relationship Manager/ Credit Administrator sha ll verify the
appropriateness of the terms and conditions of insurance policies.
3. The Customer Relationship Officer/Branch Manager/Consumer Loan
Officer/Credit Administrator is responsible for the follow-up and timely renewal
of insurance policies. However, remote branches shall be supported by the
nearby branch or distrkt/ consumer and mortgage credit in case of
unavailability of insurance companies.
4. Before disbursement, Fire and Lightning Insurance is mandatory for Mortgage
loan.
5. For Motor Vehicle, the borrower shall purchase appropriate comprehensive
insurance policy cover where the Bank is incl uded as a first and co-beneficiary.
8.5. Consumer and Mortgage Credit Disbursement

l. No loan shall be disbursed without execution of loan and mortgage contract;
collection of all security documents and insurance policies. Once the loan and
security contracts are properly signed and registered, the approved loan shall be
disbursed upon fulfillment of all terms and conditions.
2. The Branch Manager/Manager-Consumer and Mortgage Credit/ the concerned
person at di strict as appropriate shall disburse (as Authorizer) the loan with due
care and strictly in line with the terms and conditions of the loan approval.
3. The Customer Relationship Officer or Branch Manager at Branches and the
Consumer Loan Officer at Head Office and the Custqt~~~~~~hip Manager
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at Districts shall facilitate (as in putter) the disburs~,:n;,,~t;~~~~e.~~·~~?cf)oans.

Bank a/Abyssinia
4. Approved loans, if not signed within 90 days from the date of approval, shall
result in re-approval by the concerned approving organs. ln such cases, the
Branch Manager/ Consumer Loan Officer (at H.O) or the Customer
Relationship Manager at Districts sha ll advise the borrower to apply re-approva l
so that the loan already appraised can be updated and presented for the
concerned committee for decision.
5. The Customer Relationship Officer /Credit Administrator shall properly (i)e all
loan documents in a safe p lace and in a way that ensures easy retri eval of the
file, in case needed.
6. Ownership title transfer is mandatory for disbursement, however, the bank may
allow disbursements pending ownership title transfers, when the comm ittee
approves or decides so, upon sign ing and reg istering of the property of the
mortgagor.
7. After loan approval , the Bank may write an undertaking letter to the seller
stating that immediate direct payment shall be effected when title transfer is
con1pleted.
8. Disbursement of loans for construction of a house shall be done on phase by
phase basis as the case may be, ensuring that the customer has committed the
expected equity first as evidenced by deposit in blocked account and
corresponding share of actual construction cost committed out of the total cost
of construction (as verified by the Bank 's Engineer) where the total shall sum
up to at least the m inimum equ ity contribution expected of the total construction
cost. Subsequent disbursements shall be done after the Bank's Collateral
Valuator ensured that preceding disbursement/s is properly applied on the
construction work (i. e. the disbursed loan is equivalent to the work executed).
9. Disbursement ofloan for purchase of real estate shall be done after land holding
certificate of the house to be purchased is prepared in the name of the buyer;
loan and mortgage contract is signed and collection of all security documents
and insurance policies is done.
I 0. If ownership certificate is not ready, for purchases 1Jt5ID't~Ji l71l1tates, the bank
shall write conditional letter of guarantee to the real. l;;ts{W~-~1/
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it would effect immediate direct payment when the ownership certificate is

prepared in the name of the buyer. However, the applicant can offer another
house as co llateral (as temporary collateral) to sho1ten the disbursement process.

Bank of Abyssinia
CHAPTER NINE
CONSUME!~ AND MORTGAGE CREDIT FOLLOW-UP
AND COLLECTION
9.1. Purpose of Loan Follow-up

Proper loan follow-up and monitoring is essential to:
1. Ensure compl iance with loan terms and conditions;
1i. Ensure end use of funds;
111. Monitor performance on 1oan repayments;
iv. Identify early warning signals, if any, and take proper remedial
actions to reduce possible loan loss from default.
9.2. Loan Collection, Follow-up and Reporting

Basically there are three types of loan fo llow up systems that the Customer
Relationship Officer/ Consumer Loan Ot1icer/Branch Manager/Customer relationshi p
Manager is expected to perform:
1. Physical follow-up;
11. Loan Repayment fo ollow-up; and
111. Legal follow -up.
9.2.1. Follow-up Responsibility
a. The Branch Manage1JConsurner and Mortgage Credit Manager /District

Manager have the responsibility for the quality of consumer loans under
his/her domain.
b. The Consumer Loan Officer/Customer Relationship Officer/Branch
Manager/ the Customer Relationship Manager sha ll regularly follow-up
periodic loan repayments and account performance on a case-by-case
basis.
c. The Customer Relationship Officer/ Consumer Loan Officer/ respective
of collateral properties and in case of

progress of mortgaged propetiy.

Bank of Abyssinia
d. The Customer Relationship Otlicer/ Consumer Loan Officer/ respective

Managers shall follow-up the end use and debt servicing of the consumer
loan.
e. The Manager - Consumer and Mortgage Credit (at HO) and the Manager
Banking Business at District and the Branch Manager at branches are
principally responsible for legal follow-up along with the concerned legal
officers. The purpose of the legal follow-up is to ensure that the legal
recourse available to the Bank is kept alive at all times. It includes:
1. Whether contracts cu·e properly executed by appropriate
persons/organs and documents are complete in all aspects;
11. Obtaining updated loan/mortgage contracts or revival letters in
Lime (revival letter refers to renewal letter fo r registration of
security contracts that have passed the statutory period as laid
down by the law);
iii. Examining the laws, regu latory directives, third patties claim,
etc.
f. Loan repayment follow-up is primarily the responsibility of the Customer

RelaLionship Officer/ Consumer Loan Officer/Branch Manager/Customer
relationship manager, i.e. he/she follo\vs- up loan repayment patterns on a
case-by-case basis.
g. The Branch Manager/the Manager Consumer and Mortgage Credit/
Manager District Business shall facilitate loan account maintenance and
transaction processing (opening loan account, collection of loan
repayments, segregation of principa l and interest upon repayment, etc.) and
monthly reporting of account performa nce to the Manager Credit Portfolio
Management.
h. Ori gina l sec urity documents shall be released only after fu ll settlement of
the loan.
Co11s1.1111er and Mortgage Credit Procedure Page 49

I
Bank of Abyssinia
9.3. Monitoring of the Loan Follow-Up Activity

I. On an ongoing bnsis, Director- Credit Management and the Dislrict Manager in
outlying distri cts is responsible for ensuring that effective follow-up of loans is
in place and the asset quality is maintained.
2. The Manager-Co nsumer and Mortgage Credit/ Branch Manager/ Manager
District Business shall monitor early warning signals and initiate proactive
remedial measm cs for proper risk management in the consumer and mortgage
credit portfolio (by type, amount, tenure, etc.).
3. The Director-Cred it M anagement and Distri ct Manager 111 outl ying districts
shall obtain periodic loao account performance reports from the Consumer and
Mortgage Credit /Manager District Business and respective branches.

Bank of Abyssinia
CHAPTER TEN
OTHER ISSUES
10.1. Exceptions/Appeal
In this Consumer and Mortgage Credit Procedure, most of the loan processing and
approval criteria are clearly stated. All credit performers are, therefore, expected to
implement the procedure with no exception or appeal. However, if there is any issue
that calls for exception but within the procedure spirit, the consumer and mortgage
credit committee at H.O and the outlying Districts shall decide on the matter
exceptionally.
Appeals shall be entertained by the consumer and mortgage cred it committee and the
D istricts as reconsideration.
10.2. Repeal
Any directive (manual or procedure), and circulars or memorandum issued on
Consumer and Mortgage Credit Procedures are repealed and replaced by this
Procedure.
10 .3. Effective Date
This Consumer and Mortgage Credit Procedure is approved by the Executive

Management Committee of the Bank of Abyssinia and it shall enter into force on the
l 61h day of the month of September 2019 signed by the Chief Executive Officer of the
Bank.
Chief Executive Officer

Consumer and Mortgage Credit Procedure

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Bank ofAbyssh1ia

Consum.er and Mortgage Credit

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CONSUMER AND MORTGAGE CREDIT FOR ETHIOPIAN RESJDENTS ......... ................. 29

Consumer and Mortgage Credit Procedure Page ii

WHEREAS, the existing Consumer and Mortgage Credit Procedure requires to be

amended in consideration of the newly introduced organizational

structure and ever-changing market condition and the akin alteration in

consumer loan product need of customers;

WHEREAS, there is a need to revise the existing procedure so as to incorporate these

new additions and amendments, to provide more clarification on some

and to strengthen the credit risk management;

line with the Bank's Credit Policy.

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Consumer and Mortgage Credit Structure

Cbicf Executive Officer

B. Outlying District Area Cons umer an d Mo rtgage Credit Business Structure

Chief Executive Officer

Chief Brnnch Banking

Manager- District Outlying

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AUTHORITY AND RESPONSIBILITY, GENERAL

2.1. Major Authority and Responsibility

B. Manager - Consumer and Mortgage Credit or Manager - District Business

Consumer and Mortgage Credit Procedure

7. Get timely and proper solutions for deteriorating loans;

2.2. General Eligibility

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attempt to conccnl information shall entail administrative measure as far as not

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i. For construction of a house:

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(b) Bill of quantity;

ii. For purchase of a house:

J. The residential house to b e constructed or acquired by the applicant shall be

received as per the agreement.

Consumer and Mortgage Credit Procedure

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2.3.3. Terms/Conditions for Automobile Loan

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3.1. Scope of Application

3.2. Eligible Organizations

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6. Shall provide documents/information essential for the assessment of the

3.3. Eligible Employees

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• The wiJlingness of the organization to channel any outstanding payables

3.4. Mortgage Loan

3.5. Automobile Loan

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are manufactured bet\veen 5 and 15 years, respectively. However, the loan at no

3.6. Personal Loan

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3.7. Lending Interest Rate

Amount of FCY inflow(in USD) Lending Rate (in % age)

3.8. Loan Account Treatment when a Staff Resigns/ Organization

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3.9. Penalty Rate on Early Settled Loan of Staff of International

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4.1. Definition of Terms

I . Diaspora means non-resident Ethiopian or non-resident foreign nationals of

4.2. Diaspora Cons umer and Mortgage Savings Account

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4.3. Terms/Conditions for Diaspora Consume r and Mortgage Credit

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employment perio.d before the .retirement age of the app~ft~~~r comes

however, the outstanding debt shall be written-off' ~~K~j~~ns a lready held