Regulatory Alerts2019-05-04
Added · Updated
Amended Instructions for Granting Medium-Term Loans to Licensed Banks
The Central Bank of Jordan amended its Medium-Term Loan Instructions (No. 2011/54) to allow licensed banks to initially fund targeted sectors (Industry, Tourism, Agriculture, IT, and Renewable Energy) using their own resources before seeking refinancing from the Central Bank. The amendment sets maximum loan ceilings at 2 million Jordanian Dinars for Industry, Tourism, Agriculture, and IT, and 4 million Dinars for Renewable Energy, while extending loan tenors to up to five years for the former sectors and ten years for Renewable Energy. These changes take effect immediately upon issuance.
In the Name of Allah, the Most Gracious, the Most Merciful
[Logo of the Central Bank of Jordan]
Number: 10624 / 4 Date: 7 Dhu al-Qi'dah 1437 AH Corresponding to: 10 August 2016 AD
Amended Instructions for "Instructions on Granting Medium-Term Loans to Licensed Banks No. (2011/54)"
Subsequent to the Instructions regarding the program for granting medium-term loans to licensed banks No. (2011/54) dated 14/03/2011 and all subsequent circulars, concerning the provision of financing for projects operating within the targeted economic sectors (Industry, Tourism, Agriculture, Renewable Energy, Information Technology), and with the Central Bank keen on enhancing the ability of banks to benefit from the program, thereby increasing the base of beneficiaries, especially Small and Medium Enterprises (SMEs), and granting them more flexibility in providing financing to their clients within the targeted sectors, it was decided to amend the mechanism for granting medium-term loans to licensed banks and the conditions governing them as follows:
First: These Instructions form an integral part of the Instructions regarding the program No. (2011/54) dated 14/03/2011 and all subsequent circulars. Accordingly, these Instructions shall be read as a single unit.
Central Bank of Jordan CENTRAL BANK OF JORDAN
Second: Amendment of Item (First/1) contained in the Instructions on Granting Medium-Term Loans to Licensed Banks No. (2011/54) to read as follows: "The Central Bank may grant loans to licensed banks for the purpose of supporting economic sectors at specific tenors and interest rates determined by the Central Bank. Accordingly, the Central Bank will continue to grant loans to banks within the program for a tenor of up to five years for the (Industry, Tourism, Agriculture, Information Technology) sector and for a tenor of up to ten years for the Renewable Energy sector.
Third: The mechanism for granting loans within the program for granting medium-term loans to licensed banks is amended to be as follows:
- Banks wishing to benefit from the medium-term loan program shall provide financing in advance to the targeted sectors within the program using their own funds.
- Banks shall directly submit a loan application to the Central Bank equivalent to the value of the financing granted by them to beneficiaries, according to the approved form.
- The Open Market and Public Debt Department shall review the loan application, verify its compliance with the program instructions, and decide on it.
- In case the application is approved and meets the program conditions, the loan value will be credited to the banks' accounts with us within three working days from the date of receiving the loan application.
Central Bank of Jordan CENTRAL BANK OF JORDAN
Fourth: Determination of a maximum ceiling for loans financed within the program for each client according to the sector as follows:
| Sector | Maximum Loan Granted within the Program per Client |
|---|---|
| Industry, Tourism, Agriculture, Information Technology | 2 Million Dinars |
| Renewable Energy | 4 Million Dinars |
Fifth: Banks are required to communicate with the Central Bank to ensure that the financing applicant does not exceed the ceilings specified in Item Fourth above.
These Instructions shall be effective from the date of issuance.