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

Following the Palestine Monetary Authority's Instructions No. (4) of 2019 regarding the Annual Cost of Borrowing Program, and to facilitate access to and direct the systems developed by the Authority through a unified access mechanism, we inform you that an updated version of the Annual Cost of Borrowing Program has been launched to become part of the programs under the Credit Bureau Information Systems (CBIS).

Accordingly, for the purpose of using the system, specialized lending institutions are requested to do the following:

• Circulate to the users nominated by you to manage the user rights system pursuant to the Palestine Monetary Authority's Circulars No. (2016/56) dated 5/4/2016 and No. (2016/104) dated 14/6/2016, the additional right "Calculate Annual Cost of Borrowing" for the users to be selected by the management of the specialized lending institutions in accordance with the requirements of the aforementioned instructions.

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

---

Financial Stability Group
Palestine Monetary Authority

Attachment: Program Usage Guidelines

---

www.pma.ps

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

---

Usage Guidelines

Annual Cost of Borrowing Calculation Program

The user system manager at the service provider grants designated employees access rights to the Annual Cost of Borrowing Program. The authorized employee then logs into the Credit Bureau Information Systems screen, enters the username and password, selects the main screen title "Calculate Annual Cost of Borrowing", and 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 (Jordanian Dinar, US Dollar, Israeli 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 from the calendar.
• First Installment Date: Enter the due date of the first installment manually, or click the calendar icon next to the field to select the date from the calendar.
• Last Installment Date: The last installment date for the loan/financing appears automatically, as this date is calculated automatically based on the first installment date and the number of payments.
• Recurring Installment Value: Enter the value of the installment or recurring payment throughout the loan/financing repayment period. This is usually the same as the first installment value.

---

• 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 over the loan period.
• Fees/Commissions 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 (None, Insurance with this loan/financing, Insurance paid entirely by the Bank/Institution, Part of the insurance paid by the customer). If "Part of the insurance paid by the customer" is selected, two new fields appear as follows:
  1. Life Insurance Installments Repayment: Select from the pre-listed options (Upfront upon loan/financing disbursement, With Installments).

---

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

---

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

After completing 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. If the entered data is correct and consistent, the calculated rate for this loan/financing will appear, along with the original repayment schedule for this loan, which contains three columns: (Installment Number, Installment Date, and Installment Amount) for all installments of the loan/financing.

If the entered data is incorrect or inconsistent, the rate 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 rate, click the "Print Report" icon. A detailed report will be generated, printed, and handed to the customer, containing the following:

• Applicant personal data and service provider data.
• The Annual Cost of Borrowing rate 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 the customer's participation in the insurance policy.
• A table summarizing the total costs of the loan/financing.
• Signature and disclaimer.