Palestine Monetary Authority

PALESTINE MONETARY AUTHORITY

Circular No. (2020/145)
To all specialized lending institutions operating in Palestine
Date: Thursday, July 16, 2020

Subject: Annual Cost of Borrowing Program

In follow-up to PMA Instruction No. (4) of 2019 regarding the Annual Cost of Borrowing Program, and to facilitate access to and direct the systems developed by the Authority within a unified access mechanism, please be informed that an updated version of the Annual Cost of Borrowing Program has been launched to become part of the programs under the Credit Information Systems (CBIS).

Accordingly, for system usage purposes, specialized lending institutions are requested to:

• Notify the users nominated by your institution to manage the user permissions system pursuant to PMA Circulars No. (2016/56) dated 5/4/2016 and No. (2016/104) dated 14/6/2016, to add the "Calculate Annual Cost of Borrowing" permission to users selected by the management of the specialized lending institutions in accordance with the requirements of the aforementioned instructions.

• Notify users of the Annual Cost of Borrowing Program who have been granted permissions of the necessity to comply with the requirements of the aforementioned instructions, noting that the Palestine Monetary Authority will implement all measures to verify the compliance of specialized lending institutions with the content of these instructions.

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Financial Reception Group
Palestine Monetary Authority

Attachment: Program Usage Guidelines

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Note:
Ramallah & Al-Bireh Governorate - Palestine P.O. Box 452
Ramallah & Al-Bireh Governorate - Palestine P.O. Box
info@pma.ps | Fax: +970 2 2415310 | Tel: +970 2 2415251
Gaza - Palestine P.O. Box 4026
Gaza - Palestine P.O. Box
Fax: +970 8 2844487 | Tel: +970 8 2825713
www.pma.ps

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Usage Guidelines

Annual Cost of Borrowing Calculation Program

The user system manager at the service provider grants designated employees access permissions to the Annual Cost of Borrowing Program. Subsequently, the authorized employee logs into the Credit Information Systems screen, enters the username and password, selects the main screen title "Calculate Annual Cost of Borrowing", and then follows the steps below:

First: The following fields must be completed:

• Loan / Financing Information:

• Customer Name: Enter at least the customer's three-part name.
• Identification Number: Enter the customer's ID number or passport number if an ID is unavailable.
• Loan / Financing Type: Select from the pre-listed options (Personal, Real Estate Financing, Car Purchase, Personal for Housing, Purchases, Murabaha, Ijarah ending with ownership).
• Loan Amount: Enter the loan amount in numbers only.
• Currency: Select from the pre-listed options (Dinar, US Dollar, Shekel, Euro).
• Number of Installments: Enter the number of installments to repay the loan/financing.
• Installment Frequency: Select from the pre-listed options (Monthly, Daily, Weekly, Bi-weekly, Every four weeks, Quarterly, Semi-annually, Annually).
• Loan / Financing Disbursement Date: Enter the disbursement date manually, or click the calendar icon next to the field to select the date.
• First Installment Date: Enter the first installment due date manually, or click the calendar icon next to the field to select the date.
• Last Installment Date: The last installment date for the loan/financing appears automatically, as it is calculated automatically based on the first installment date and the number of payments.
• Recurring Installment Value: Enter the value of the recurring installment or payment throughout the loan/financing repayment period. This is usually the same as the first installment value.

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• Loan / Financing Costs:

• Interest / Profit Repayment Method: Select from the pre-listed options (With Installments, Upfront). The first option appears periodically with installments, as most loans/financing deduct interest with periodic installments.
• Total Interest / Profit: Enter the total amount of interest/profit the customer will pay throughout the loan period.
• Fee / Commission Payment Method: Select from the pre-listed options (Upfront, With Installments). The first option appears upfront, as most loans/financing deduct commissions upon disbursement.
• Total Fees / Commissions: Enter the total amount of fees/commissions the customer will pay for the loan/financing.
• Customer Participation in Insurance Policy: Select from the pre-listed options (No insurance with this loan/financing, Insurance is fully paid by the Bank/Institution, Part of the insurance is paid by the customer). If "Part of the insurance is paid by the customer" is selected, two new fields appear as follows:
  1. Life Insurance Premiums Repayment: Select from the pre-listed options (Upfront upon loan/financing disbursement, With Installments).

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• 2. Total Life Insurance Premiums: Enter the total amount of life insurance premiums the customer will pay in exchange for obtaining the loan/financing.

Second: Calculate the Annual Cost of Borrowing Percentage and Print the Report

After completing the filling of all the aforementioned fields and ensuring they are filled correctly and consistently, click the "Calculate Annual Cost of Borrowing" icon located at the bottom of the screen. The calculated percentage for this loan/financing will appear if the entered data is correct and consistent. The original repayment schedule for this loan will also appear, containing three columns: (Payment Number, Payment Date, and Payment Amount) for all installments of the loan/financing.

If the entered data is incorrect or inconsistent, the percentage will not be calculated, and the following warning message will appear: "Please verify the entered numbers. There is a discrepancy between the total value of installments on one hand, and the sum of costs paid periodically plus the loan principal on the other hand. The difference amounts to: -----".

After calculating the Annual Cost of Borrowing percentage, click the Print Report icon. A detailed report will be generated, printed, and delivered to the customer, containing the following:

• Applicant personal data and service provider information.
• Annual Cost of Borrowing percentage for this financing.
• Financing data, including (loan amount, financing type, financing term, currency).
• Pricing data, including the interest rate granted by the bank, its calculation method, and customer participation in the insurance policy.
• A table summarizing the total costs of the loan/financing.
• Signature and disclaimer.

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