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2026-01-01

Instructions No. (3) of 2026 on Amending Instructions No. (2) of 2015 Regarding Credit Granting Determinants and Controls

The Palestine Monetary Authority issued Instructions No. (3) of 2026 to amend the credit granting determinants and controls under its 2015 framework. The revised regulations prohibit banks from extending certain secured or unsecured credit to subsidiaries, distressed debtors, and non-residents without prior approval, while capping aggregate share purchase financing at 10% of the private sector portfolio and 10% of capital for unlisted Palestinian companies. Furthermore, the amendments mandate comprehensive risk analysis, minimum 50% tangible collateral, Sharia compliance for Islamic banks, and enhanced disclosure requirements to strengthen credit concentration risk management.

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Palestine Monetary Authority PALESTINE MONETARY AUTHORITY

Instructions No. (3) of 2026 Regarding the Amendment of Instructions No. (2) of 2015 on Credit Granting Determinants and Controls

Pursuant to the provisions of Law Decree No. (9) of 2010 on Banks, particularly Articles (13, 14, 15, 38, 72) thereof, and after reviewing Instructions No. (2) of 2015 and No. (8) of 2015 on Credit Granting Determinants and Controls, and Instructions No. (4) of 2022 and No. (2) of 2023 on Credit Concentration Risks, and in accordance with the powers delegated to us, and in pursuit of the public interest, we have issued the following Instructions:

Article (1) Definitions

The following words and phrases shall, wherever they appear in these Instructions, bear the meanings assigned to them below unless the context indicates otherwise: Original Instructions: Instructions No. (2) of 2015 on Credit Granting Determinants and Controls.

Article (2) Amendment of the Provisions of Article (4) of the Original Instructions

The text of Article (4) of the Original Instructions is replaced with the following: A bank shall be prohibited from doing the following:

  1. Granting credit secured by the bank's own shares or debt instruments issued by it.

  2. Granting credit for the purpose of purchasing the bank's own shares or debt instruments issued by it or its subsidiaries and affiliates.

  3. Exceeding credit granted for underwriting or purchasing shares in another bank or debt instruments issued by it or secured thereby, exceeding 5% of the other bank's shares without obtaining prior approval from the Palestine Monetary Authority.

  4. Granting credit to settle the obligations of distressed customers with the bank or other banks, unless done within the framework of restructuring or confirming such debt or enhancing collateral.

  5. Granting credit for use outside Palestine without obtaining prior approval from the Palestine Monetary Authority.

  6. Granting credit to any person whose debt has previously been written off, unless such person has fully settled that debt.

Article (3) Amendment of the Provisions of Article (5) of the Original Instructions

The text of paragraph (1/t) of Article (5) of the Original Instructions is replaced with the following: "The purchase of vehicles shall be financed in accordance with the bank's credit policy, subject to preparing and approving specific mechanisms and controls for financing and the maximum financing ratio that may be granted to the customer, including customer and product risks."

Article (4) Amendment of the Provisions of Article (6) of the Original Instructions

The text of Article (6) of the Original Instructions is replaced with the following: A bank shall comply with the following when granting credit to its customers for investment in corporate shares:

  1. Providing a dedicated policy and procedures for financing investment in shares, covering all major risks to which the bank may be exposed.

  2. Conducting a comprehensive analysis before granting share purchase financing, including at minimum the potential impact on financial ratios and indicators, covering capital adequacy, facilities-to-deposits ratio, liquidity coverage, net stable funding, financial leverage, concentration limits, related party exposures, taking into account relevant instructions issued by the Palestine Monetary Authority.

  3. The total credit granted by the bank for customers' share purchases shall not exceed, at any time, 10% of its total private sector credit portfolio.

  4. The credit granted to customers for investment in shares of Palestinian companies not listed on the Palestine Exchange shall not exceed 10% of the capital base.

  5. Providing tangible collateral amounting to no less than 50% of the value of credit granted.

  6. Financing up to a maximum of 80% of the value of shares intended for purchase at that time.

  7. Establishing a dedicated credit account for credit granted for share purchase financing within the credit system, named "Share Financing Account".

  8. Islamic banks shall obtain Sharia compliance approval before granting any financing for investment in corporate shares.

  9. Accepting up to a maximum of 70% of the market value of pledged shares listed on the Palestine Exchange for calculating loss provisions for secured facilities.

  10. Disclosing in periodic reports submitted to the Palestine Monetary Authority all credit facilities granted to customers for share purchases.

Article (5) Repeal of Conflicting Provisions

Instructions No. (8) of 2015 on Amending Credit Granting Determinants and Controls Instructions are repealed. All provisions conflicting with these Instructions are repealed.

Article (6) Implementation and Enforcement

All competent authorities shall implement the provisions of these Instructions according to their respective jurisdictions, and they shall apply from the date of issuance. Issued in Ramallah, on: 18/05/2026 AD

Yahya Shannar Governor [Signature]

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