Regulatory Alerts2018-01-01
Instructions No. (53) of 2018 Concerning the Classification of Credit Facilities, Provisions, and Accepted Collateral
The Palestine Monetary Authority issued Instructions No. (53) of 2018 to amend the collateral acceptance ratios for credit facilities, specifically targeting vehicles, machinery, and equipment for provision calculation purposes. The directive establishes tiered acceptance percentages based on the duration since seizure, reducing collateral valuation from 50% to 25% for vehicles and from 70% to 35% for machinery over a four-year period, contingent upon valid insurance and registered security interests. All conflicting prior provisions are repealed, and the updated rules take immediate effect upon issuance to ensure accurate risk provisioning across licensed banks.
Palestine Monetary Authority
PALESTINE MONETARY AUTHORITY
Instructions No. (53) of 2018
Concerning the Classification of Credit Facilities, Provisions, and Accepted Collateral
Pursuant to the provisions of Decision-Law No. (9) of 2010 Concerning Banks, particularly Article (40) thereof,
and in accordance with the authorities vested in us,
and in pursuit of the public interest,
we hereby issue the following Instructions:
Article (1)
Scope of Application
The provisions of these Instructions shall apply to banks licensed by the Palestine Monetary Authority.
Article (2)
Amendment of the Provisions of Item (Third)
The collateral acceptance ratios for vehicles, machinery, and equipment for the purpose of establishing provisions, as stipulated in Item (Third), paragraph (3) of Instructions No. (2008/01), are amended as follows:
A. Vehicles: The acceptance ratio is 50% of the insurance policy value or the market value, whichever is lower, for the first two years from the date of seizure, and 25% for the third and fourth years, provided that mortgage procedures are completed and the insurance policy is assigned in favor of the bank. Collateral will not be accepted for provision calculation thereafter, and the collateral is invalidated if a valid insurance policy or license is not available.
B. Machinery and Equipment: The acceptance ratio is 70% of the insurance policy value or the market value, whichever is lower, for the first two years from the date of seizure, and 35% for the third and fourth years, provided that mortgage procedures are completed in the Movable Property Security Rights Register and the insurance policy is assigned in favor of the bank,
C. Collateral will not be accepted for provision calculation thereafter, and the collateral is invalidated if a valid insurance policy is not available.
Article (2)
Repeal
All provisions conflicting with these Instructions are hereby repealed.
Article (3)
Implementation and Enforcement
All competent authorities shall implement the provisions of these Instructions within their respective jurisdictions, and they shall apply from the date of their issuance.
Issued in the city of Ramallah on ... ... ... dated 2018/04/19
Supervision and Inspection Department
Palestine Monetary Authority
Ramallah - Palestine P.O. Box 452 | Tel: +970 2 2415250 | Fax: +970 2 2415310 | +970 2 2415310: Fax | +970 2 2415250: Tel | P.O. Box 452 Ramallah - Palestine
Gaza - Palestine P.O. Box 4026 | Tel: +970 8 2825292 | Fax: +970 8 2844487 | +970 8 2844487: Fax | +970 8 2825292: Tel | P.O. Box 4026 Gaza - Palestine
Email: info@pma.ps | Email: info@pma.ps
www.pma.ps