Regulatory Alerts2026-01-01
High Authority - 2020 - Instructions No. 36 Regarding Early Repayment of Financing
The Palestine Monetary Authority issued Instructions No. 36 of 2020 to amend Article (7) of its Responsible Lending framework, mandating that licensed Islamic banks reinstate profits credited to repaid balances and permitting early repayment fees for full or partial financing settlements. The revised paragraph (3/5) explicitly requires banks to credit back all profits associated with the repaid principal while allowing them to deduct early settlement fees according to specified ratios. These Instructions apply to all licensed Islamic banks in Palestine, repeal conflicting provisions, and take effect immediately upon issuance.
PALESTINE MONETARY AUTHORITY
Instructions No. (36) 2020 Regarding Early Repayment of Financing
Pursuant to the provisions of Law Decree No. (9) of 2010 concerning Banks, particularly Article (21) thereof, and after reviewing Instructions No. (2) of 2016 concerning Responsible Lending, and in accordance with the powers delegated to us, and in pursuit of the public interest, we have issued the following Instructions:
Article (1) Scope of Application
The provisions of these Instructions shall apply to all Islamic banks licensed by the Palestine Monetary Authority to conduct banking business in Palestine.
Article (2) Definitions
Original Instructions: Instructions No. (2) of 2016 concerning Responsible Lending.
Article (3) Amendment of Article (7) Provisions
The text of paragraph (3/5) of Article (7) of the Original Instructions is replaced with the following: "The bank shall reinstate all profits credited to the repaid balance to the customer, and may charge an early repayment fee from the repaid balance in case of full or partial repayment of financing, according to the ratio specified in the fees and commissions instructions issued by the Palestine Monetary Authority."
www.pma.ps Ramallah and Al-Bireh Governorate - Palestine P.O. Box 452 | Tel: +970 2 2415251 | Fax: +970 2 2415310 | info@pma.ps Gaza - Palestine P.O. Box 4026 | Tel: +970 8 2825713 | Fax: +970 8 2844487
PALESTINE MONETARY AUTHORITY
Article (4) Repeal
All provisions inconsistent with these Instructions are hereby repealed.
Article (5) Implementation and Enforcement
All competent authorities shall implement the provisions of these Instructions, each within its respective jurisdiction, and they shall apply from the date of their issuance.
Issued in Ramallah on 2020/9/9
Financial Stability Group Palestine Monetary Authority