Regulatory Alerts2017-06-15
Added · Updated
Central Bank of Jordan Instructions for Classification and Treating Lease-to-Own Homes for Licensed Islamic Banks
The Central Bank of Jordan mandates specific impairment provisions for Lease-to-own homes (Ijara Muntaheya bil tamlik) for licensed Islamic banks, requiring 25%, 50%, and 100% provisions for past due periods of 30-59, 60-89, and 90+ days respectively. The directive enforces cross-default rules where classification of one facility as non-performing or watch-list triggers the same status for all other credit facilities extended to that obligor. It permits rescheduling of non-performing installments up to three times, contingent on cash settlements covering at least 35%, 70%, and 100% of the past due balance for the first, second, and third rescheduling agreements. These instructions become effective for financial statements dated 31/12/2014, requiring banks to submit written work procedures approved by their board of directors to the Central Bank.