Regulatory Alerts2020-07-05
Added · Updated
Central Bank Instructions No. 6/2020 on Implementing AAOIFI Financial Accounting Standards
The Central Bank of Jordan issues Instructions No. 6/2020 to implement AAOIFI Financial Accounting Standards 30, 35, 33, and 26 for Islamic banks. The document mandates specific governance structures for credit risk management, restricts the use of General Banking Risk Reserve surpluses, and sets Tier 2 capital treatment for Stage 1 provisions at a 1.25% threshold. It imposes quantitative limits on real estate exposure, capping total real estate financing at 50% of customer deposits and total real estate investment at the lower of 40% of regulatory capital or 10% of deposits, effective January 1, 2021. Banks must submit external auditor certificates verifying expected credit loss calculations and provide specific disclosure schedules with each financial statement.