Regulatory Alerts2023-03-22
Added · Updated
Central Bank of Jordan Circular No. 5780/1/27 on Retail Credit Maturity Limits
The Central Bank of Jordan reinstates an eight-year maximum original maturity limit for retail credit portfolios, excluding secured residential mortgages and lease-to-own contracts. Banks are permitted to maintain existing retail loans with maturities exceeding eight years under previously signed contracts but must ensure that any newly structured or rescheduled retail loans do not exceed an eight-year repayment period. Additionally, banks are required to strictly adhere to the debt burden ratios specified in their approved credit policies.
In the Name of Allah, the Most Gracious, the Most Merciful
Number: 5780/1/27 Date: 26/8/1444 AH Corresponding Date: 22/2/2023 AD
Circular to all banks operating in the Kingdom
Greetings,
Continuing the Central Bank's approach of reviewing and amending instructions to align with international standards, and following our Circular No. (248/3/10) dated 2023/1/5, the following has been decided:
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Reinstating Item (6/b) of the Instructions on Dealing with Customers Fairly and Transparently No. (2012/56) dated 2012/10/31, stating that "the maximum limit for the full maturity of credit granted within the retail portfolio (excluding residential loans secured by real estate mortgages and lease-to-own contracts) shall not exceed eight years (Original Maturity)."
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Allowing banks to retain existing retail portfolio maturities granted for a period exceeding (8) years according to contracts signed with customers.
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Ensuring that the repayment period for retail portfolio loans that are structured or rescheduled from the date of structuring or rescheduling does not exceed (8) years.
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Fully adhering to the debt burden ratios specified in the bank's approved credit policy and not exceeding them from the beginning and continuing.
The provisions of the above circular shall be effective from its date.
Please accept our highest regards,
Governor Dr. Adel Al-Sharkas