Regulatory Alerts2020-01-01
Circular No. 60/2020: Tawarruk Product
The Palestine Monetary Authority and the Supreme Council for Sharia Supervision issued Circular No. 60/2020 to regulate Islamic banks' use of the Tawarruk product, defining it as purchasing a commodity on credit or at a markup and immediately selling it to a third party for cash. The directive restricts Tawarruk to specific unfinanceable scenarios—including debt repayment, contractor payroll, liquidity shortages, marriage dowries, out-of-country education and medical costs, and student defaults—while capping aggregate Tawarruk financing at 10% of a bank's total portfolio. Institutions must adhere to Sharia Standard No. 30, implement comprehensive supervisory controls with approved policies and staff training, and secure prior regulatory approval for any transactions outside the enumerated exceptions.