Regulatory Alerts2019-03-10
Added · Updated
Central Bank of Jordan Circular No. 27/5/3808 on Savings Account Prize Regulations
The Central Bank of Jordan mandates that banks maintain the status quo for savings account prize plans during 2019, implement regulated quantitative and qualitative controls starting in 2020, and completely abolish such prize programs by 2021, with exceptions only for universal reward programs. The 2020 regulations cap single prizes at 100,000 Jordanian Dinars and annual total prizes at 3 million Dinars, while prescribing specific draw frequencies and strict advertising standards to prevent unfair competition. Additionally, banks are required to publicly announce savings account interest rates and submit monthly reports on these rates to the Central Bank.
In the Name of Allah, the Most Gracious, the Most Merciful
[Logo of the Central Bank of Jordan]
Reference No.: 27/5/3808 Date: 3/7/1440 AH Corresponding to: 10/3/2019 AD
Circular to Banks Operating in the Kingdom
Greetings,
With reference to the meeting held at the Central Bank of Jordan regarding the "Savings Account Prize Regulations Project" on 22/1/2019, and with the aim of regulating the final exit from this phenomenon and giving banks active in granting prizes sufficient time to do so without affecting their operations, the following has been decided:
First: The status quo for banks during 2019 regarding their plans to grant prizes on savings accounts shall be maintained. Second: Starting from the beginning of 2020, the granting of prizes on savings accounts at banks shall be regulated through the quantitative and qualitative controls attached to this circular. Third: Starting from the beginning of 2021, prize programs on savings accounts at banks shall be completely abolished, except for those related to reward and benefit programs that all customers benefit from as a result of using the bank's services and products. Fourth: Banks are left to determine interest rates on savings accounts, provided that banks announce the interest rates on their savings accounts on the bank's website, main branch, and branches, effective from this date, and that full compliance with them is maintained in accordance with the requirements of the prevailing regulations.
Please accept our highest regards,
Governor Dr. Ziad Fariz
- Attached
Central Bank of Jordan Attachment Quantitative and Qualitative Controls for Granting Prizes on Savings Accounts for 2020
1. Specifications of Prizes on Savings Accounts
a. The upper limit of the value of a single prize (whether cash or in-kind) on a savings account shall not exceed (100,000) one hundred thousand Jordanian Dinars, and the total value of all cash and in-kind prizes provided by the bank during one year shall not exceed (3) million Dinars. b. The frequency of prize draws shall be determined as follows:
- Draws for major prizes with fixed values as specified in paragraph (a) of this article shall occur twice a year at the latest, and must be uniform for all banks on the last working day of June and December.
- Draws for prizes with values ranging between (10,000) Jordanian Dinars and less than 100,000 Jordanian Dinars shall occur four times at the latest, on the last working day of the following months: March, June, September, and December.
- Banks may determine the frequency of draws for prizes less than 10,000 Jordanian Dinars.
2. Marketing of Savings Accounts Linked to Prizes and Advertising Banks may promote savings accounts linked to prizes through main branches, branches, websites, social media, and audio-visual media channels, provided that the bank adheres to the following:
a. The information, terms, and conditions mentioned in direct or indirect advertising for the savings account or prize must be accurate, clear, comprehensive, and reflective of their true nature, without exaggeration in advertising content or inflation of the features of the savings account linked to prizes. b. The bank's name must be clearly displayed in all advertisements upon publication, and the language of the advertisement must be simple and easy, not subject to ambiguity or interpretation, and no specialized technical terms unintelligible to customers shall be used. c. The phrases used in indirect advertising, specifically visual and audio advertising media as well as electronic messages, may be concise, provided that the bank provides all details on its website and in its branches.
d. Every bank must adhere to means of legitimate competition in advertising prizes linked to savings accounts and avoid practices that may fall under the framework of unfair competition. e. The advertised conditions for providing prizes must be observed, and none of them may be modified or new conditions added. f. Advertisements related to the promotional campaign for providing prizes shall be removed after their completion. g. Advertisements for cash and in-kind prizes should clarify that they are subject to income tax.
3. General Provisions