Regulatory Alerts2020-07-05
Added · Updated
Central Bank of Jordan Circular No. 6/2020: Implementation of AAOIFI Accounting Standards 30, 35, 33, and 26
The Central Bank of Jordan mandates the implementation of AAOIFI Accounting Standards 30, 35, 33, and 26 for Islamic banks, requiring robust credit risk management frameworks and internal control systems. The circular establishes specific capital treatment rules, limiting the inclusion of Stage 1 provisions in Tier 2 capital to 1.25% of risk-weighted assets, and imposes concentration limits capping real estate financing at 50% of customer deposits and total real estate investments at the lower of 40% of regulatory capital or 10% of customer deposits, effective January 1, 2021. Banks must ensure external auditor verification of expected credit loss methodologies and submit quantitative and qualitative disclosures with every financial statement.