Regulatory Alerts2021-01-01
Instructions No. 25 of 2021 Regarding the Handling of Employee Loan Installments and Financing
The Palestine Monetary Authority issued Instructions No. 25 of 2021 to regulate how licensed banks handle employee loan and financing installments when salary payments are irregular due to force majeure. The directive mandates that banks cover the full monthly installment if the entire salary is transferred, or cover up to 50% of the installment if the employer withholds part of the salary, while capping total employee debt deductions at 50% of the transferred amount. Banks must apply these rules prospectively, charge salary transfer fees only once per month, and face penalties under Decision-Law No. 9 of 2010 for non-compliance, with exceptions allowed only for loans backed by additional income or legally verifiable employee consent.
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