Regulatory Alerts2015-01-01
Circular No. 15: Borrower Guarantee for Personal Facilities
The Palestine Monetary Authority issued Circular No. 15/2015 to mandate that banks must not report borrowers as guarantors for their own personal facilities, as this practice violates legal loan obligations and distorts credit data. The circular requires immediate correction of previously misreported borrower-guarantor relationships in the Credit Information System (Sijili) to ensure accurate borrower classification. Banks are instructed to enforce strict compliance across all relevant departments, with the Authority reserving the right to take legal action against non-compliance to safeguard data integrity.
Palestine Monetary Authority
PALESTINE MONETARY AUTHORITY
Circular No. (15 / 2015)
To all banks operating in Palestine Date: Wednesday, February 04, 2015
Subject: Borrower Guarantee for Personal Facilities
Further to our Circular No. (2007/160) issued on 28/10/2007 regarding the regulation of the Credit Information System's operations, to best international practices concerning the disclosure of borrower and guarantor data, to the procedures taken regarding the correct declaration of facility guarantee data for the Credit Information System database (Sijili), and given the recent errors observed from some banks in declaring facility guarantees, we wish to highlight and emphasize the following:
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A borrower shall not act as a guarantor for their own facilities as long as they are legally bound to repay them under the loan agreement. In other words, the bank shall not declare the borrower as a guarantor for the facilities granted to them when reporting them in the monthly facility file or when opening a record for new facilities, as this negatively impacts data accuracy and the borrower's classification.
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The incorrect disclosure by some banks, as mentioned in the paragraph above, has resulted in inaccurate classification of some borrowers. This necessitates the Palestine Monetary Authority to take the appropriate immediate action to amend the data, which includes invalidating all guarantees where borrowers act as guarantors for themselves and have been reported to the Credit Information System.
Therefore, bank administrations are requested to disseminate these instructions to the facilities, information technology, and relevant departments and staff to ensure strict compliance and accurate data declaration. Otherwise, the Palestine Monetary Authority will be compelled to take appropriate legal action to preserve data accuracy and Credit Information System outputs.
Public Relations and Market Discipline Department Palestine Monetary Authority
Ramallah - Palestine P.O. Box 452 | Tel: +970 2 2415250 | Fax: +970 2 2409922 | Phone: +970 2 2415250 | Fax: +970 2 2409922 | Ramallah - Palestine P.O. Box 452 Gaza - Palestine P.O. Box 4026 | Tel: +970 8 2825292 | Fax: +970 8 2844487 | Phone: +970 8 2825292 | Fax: +970 8 2844487 | Gaza - Palestine P.O. Box 4026 Email: info@pma.ps | Email: info@pma.ps www.pma.ps