Central Bank of Jordan Collection Guidelines for Microfinance Companies

CENTRAL BANK OF JORDAN Central Bank of Jordan Consumer Financial Protection Department

Collection Guidelines for Microfinance Companies

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CENTRAL BANK OF JORDAN Central Bank of Jordan

Article (1): General Framework The general framework of these guidelines summarizes the following main points:

• Documented communication channels that the Company is permitted to use when communicating with customers or their guarantors.
• Rules for communicating with customers, including the number of communications per month.
• Practices prohibited for the Company to engage in during debt collection.
• Procedures to be followed if a customer objects to the amounts demanded by the Company.
• Collection procedures from customer accounts.
• Procedures for dealing with defaulting customers.

Article (2): Objective of the Guidelines The primary objective of these guidelines is to regulate the collection mechanism and communication with individual customers and their guarantors, enabling microfinance companies to follow clear and specific procedures that protect the rights of all parties involved and ensure transparency and fairness in collection processes, while reducing abuse and unjustified pressure. Every company must prepare a binding collection policy that includes, at a minimum, the provisions of these guidelines, and apply it in coordination and synchronization with relevant legislation.

Article (3): Scope of Application These guidelines apply to all microfinance companies subject to the supervision of the Central Bank of Jordan. The Company must prepare its own policy and have it approved by the Board of Directors/Board of Managers, effective as of April 1, 2023.

Article (4): Controls and Procedures A. Communication channels with customers: Microfinance companies must make sufficient efforts to communicate with customers and/or guarantors before taking any legal action against them, while adhering to restricting the communication channels the Company is permitted to use to the following:

1. Telephone calls.

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CENTRAL BANK OF JORDAN Central Bank of Jordan

2. Text messages and notifications, for example (SMS), the Company's application, communication applications such as WhatsApp, Telegram.
3. Email.
4. Written letters.
5. Personal visit to the customer: This method should only be resorted to after exhausting all the above communication channels, provided that the Company documents that the customer could not be reached through those channels.

B. Rules for communicating with customers: The Company must observe the following items when communicating with customers, ensuring that all procedures taken in this regard are documented:

1. Telephone calls:

• The collection employee must identify themselves, the name of the Company, and the purpose of the call.
• The number of telephone calls must not exceed (5) times per week and a maximum of (25) live/active calls per month, between 8:00 AM and 5:00 PM. Calls are prohibited on Fridays and official holidays.

2. Text messages and emails: The text of the message must include, at a minimum, the name of the Company, the purpose of the message, contact numbers, and working hours.
3. Personal visit to the customer: Visits must be from Saturday to Thursday between 9:00 AM and 5:00 PM, ensuring that no information regarding the customer's debt is disclosed in the presence of any other person.

C. Practices prohibited for the Company during collection: In addition to the prohibited practices mentioned in the provisions of the effective Consumer Financial Protection Instructions for the microfinance sector, the collection employee is prohibited from engaging in any of the following:

1. Using harsh or obscene language, threats, or violence.

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CENTRAL BANK OF JORDAN Central Bank of Jordan

2. Contacting customers at their workplace phone numbers (unless it is impossible to reach the loan parties through other means, while emphasizing the preservation of privacy and confidentiality of any information regarding the customer's debt, and not disclosing it in the presence of any other person).
3. Communicating with any third party to pressure the customer or demand the debt from them.
4. Publishing any list of defaulting customers, except for proper publication and official statements related to legal cases.

D. Customer objection to demanded amounts: If there are outstanding installments due from the customer, they have the right to object to the amount demanded. In this case, the Company must do the following:

1. Record and document the objection and inform the customer of the result within a maximum of (10) working days from the date of the objection.
2. Do not communicate with the customer regarding the payment of disputed unpaid amounts until the objection is resolved.

E. Collection procedures from customer accounts: If the customer has authorized the Company to deduct the monthly installment value from their bank account and/or any other entity from which deductions can be made, the Company must determine the deduction date in advance according to the repayment schedule, ensuring it is compatible with the date of the customer's monthly salary deposit.

F. Procedures for dealing with defaulting customers:

1. The Company must consider the customer's circumstances when they request to reschedule the debt, provided that the customer's financial circumstances have changed involuntarily.
2. If the customer is willing to pay any installment and it is impossible to pay subsequent due installments, the installment should be accepted without requiring the payment of the full outstanding amount.

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CENTRAL BANK OF JORDAN Central Bank of Jordan

Article (5): General Provisions A. If the Company contracts with a third party for debt collection¹, the Company is responsible for ensuring that the third party complies with the provisions of the collection policy prepared by the Company, as well as ensuring their commitment to maintaining the confidentiality of customer data. B. If a collection employee receives any payment from the customer outside the Company's premises or branches, they must document this through payment receipts issued by the Company, consisting of two copies (one for the customer and one for the Company's files). C. The department responsible for collection procedures must be subject to periodic review by the Company's Compliance Department to ensure the integrity of procedures and their compliance with relevant legislation. D. The Company must work on the following:

1. Establish a specific mechanism for handling collection complaints that outlines the procedures taken.
2. Conduct periodic reviews of collection procedures to improve them in accordance with the relevant instructions.
3. Disseminate the Company's collection policy to collection employees to ensure compliance.
4. Provide necessary training to collection employees on customer protection principles and transparent dealing.

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¹ It is permissible to engage a third party to collect the Company's debts, provided that all partners of the lawyer/law firm are lawyers.