Regulatory Alerts2023-01-01
Instructions No. (2) of 2023 Regarding the Amendment of Instructions No. (4) of 2022 Concerning Credit Concentration Risks
The Palestine Monetary Authority issued Instructions No. 2 of 2023 to amend its 2022 Credit Concentration Risks framework, updating exposure thresholds, defining new credit risk mitigants, and clarifying capital adequacy calculation methods. The directive introduces preferential risk weights of 100% for domestic financing targeting agriculture, industry, renewable energy, technology, and healthcare when concentrations exceed 20% for systemically important banks and 25% for others, alongside a 20% weight for Palestinian government bonds and credit. It also exempts banks from prior regulatory approval for fully cash-collateralized or low-concentration exposures, mandates automatic lapse of unexecuted approvals after 90 days, and requires deducting eligible credit risk mitigants from the capital adequacy numerator.