Palestine Monetary Authority

Circular No. (2016/53)
To all lending institutions operating in Palestine Date: Tuesday, March 29, 2016

Subject: Developmental Items Implemented on the New Version (Version IV) of the Credit Information System

In continuation of our previous circulars regarding training staff of lending institutions on the developed version of the Credit Information System, as well as specifying the timeframes for launching the new version, and pursuant to Memorandum No. (2009/26) dated 26/05/2009, and Circular No. 2014/182 dated 17/12/2014 governing the Credit Information System, the following outlines the key developments implemented on the Credit Information System Version IV (Version IV), which included the following items:

• Modification of the inquiry screen
• Modification of the credit record opening screens
• Modification of the credit report
• Modification of the monthly facility file migration mechanism

Based on the above, all institutions are requested to disseminate this circular to the relevant departments and adopt the provisions herein for the purpose of disclosure and data exchange on the Credit Information System, effective from April 3, 2016.

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Public Relations and Market Clarifications Department Palestine Monetary Authority

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Ramallah - Palestine P.O. Box 452 | Tel: +970 2 2415250 | Fax: +970 2 2409922 | Fax: +970 2 2409922 | Tel: +970 2 2415250 | P.O. Box 452 - Ramallah, Palestine Gaza - Palestine P.O. Box 4026 | Tel: +970 8 2825292 | Fax: +970 8 2844487 | Fax: +970 8 2844487 | Tel: +970 8 2825292 | P.O. Box 4026 - Gaza, Palestine Email: info@pma.ps | Email: info@pma.ps www.pma.ps

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Palestine Monetary Authority

First: Modification of the Inquiry Screen

To enhance the performance of the Credit Information System and enable lending institutions to analyze loan requests efficiently and within a standard timeframe to serve the speed and accuracy of credit decision-making, the inquiry screen has been developed to be divided into two sections:

Section One: Inquiry for New Borrowers

This section constitutes the core part of the inquiry screen, containing the basic data of borrowers and guarantors to be inquired about based on customer identity data, with emphasis on the following:

• Conducting inquiry operations for borrowers and their guarantors is a mandatory requirement to complete facility granting procedures, including inquiries for facility partners and guarantors.
• The operator performing the inquiries must be required to enter complete data of the inquired party according to the customer's identity data and verify the correct entry of the customer's full four-part name clearly and completely.

Section Two: Historical List of Executed Inquiries

This section includes a list of all historical inquiries executed for the institution's customers by users with inquiry authorization at the institution level, with the following considerations:

• Ordering executed inquiry operations by users from most recent to oldest, allowing reference to any inquiry regardless of the execution period.
• Ability to search for any previously executed inquiry for customers by utilizing the search feature available on the inquiry list, using one of the available search engines (e.g., ID number, period, branch, etc.).
• When executing inquiry operations, it is necessary to verify the two items related to the purpose of inquiry and reason for inquiry, as these items may change according to the nature of the inquiry.

For guidance, please refer to the instructional guide related to executing inquiry operations, available on the Credit Information System website under the "Help" icon.

Second: Modification of the Credit Record Opening Screens

Following the modifications made to Version III of the Credit Information System, this version has been developed while maintaining its comprehensiveness for all types of facilities and classifications, including disclosure of housing loans, mortgages, and facilities granted to small and medium enterprises (SMEs), in addition to implementing the following modifications to the developed version:

• Verify the classification of the borrower and the facilities obtained, thereby enhancing the accuracy of customer classification on the record opening screen as a first step, followed by classifying the facilities obtained by the customer according to the facility's purpose, such that:

  • Classifying the borrower initially according to the legal form of the account or the nature of the borrower to include individual facilities, joint account facilities, corporate/institutional facilities.
  • Classifying the facility according to its purpose to include individual facilities, SME facilities, housing and mortgage loans.

• To save time and effort, the credit record opening screen has been enhanced by implementing the following modifications:

  • Providing a new feature enabling the user to fill in the inquiry request number, which is a mandatory item to complete the record opening process, by selecting from the list of executed inquiries for customers under the "Inquiry Number" field, without needing to retain the inquiry number based on the ID or customer name.
  • Developing the credit record opening mechanisms for partners, such that the new mechanism enables the data entry operator to load financial data for the joint facility for partners by filling in the facility's financial data once after adding the partners' personal data, while keeping inquiries for each partner individually mandatory.

For guidance, please refer to the instructional guide related to executing joint account record opening operations.

Third: Modification of the Credit Report

To enhance the mechanisms for studying the credit report, including ease of reading and analyzing the report and facilitating access to information, the following modification has been made:

• Ordering facilities in the credit report according to the granting date from most recent to oldest at the bank/institution level, such that the report begins disclosure with the most recently granted facility, followed by facilities granted by the same bank/institution ordered from most recent to oldest, then facilities granted by other banks/institutions according to the same mechanism.

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Ramallah - Palestine P.O. Box 452 | Tel: +970 2 2415250 | Fax: +970 2 2409922 | Fax: +970 2 2409922 | Tel: +970 2 2415250 | P.O. Box 452 - Ramallah, Palestine Gaza - Palestine P.O. Box 4026 | Tel: +970 8 2825292 | Fax: +970 8 2844487 | Fax: +970 8 2844487 | Tel: +970 8 2825292 | P.O. Box 4026 - Gaza, Palestine Email: info@pma.ps | Email: info@pma.ps www.pma.ps

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Palestine Monetary Authority

• Adding a line item for the total outstanding facilities of the borrower (direct and indirect) at the bank/institution level as a sub-item under the total facilities granted to the borrower.
• Ordering facilities guaranteed by the customer so that they appear in a separate section "Customer Guarantees" for others' facilities after completing disclosure of all direct and indirect facilities obtained by the borrower.

Fourth: Monthly Facility File Migration

To develop the mechanism for uploading the monthly financial file and maintain data accuracy, comprehensiveness, and currency, while aiming to reduce time and effort and speed up updating customer financial data, a main screen "Upload Monthly Data File" has been developed, which enables the institution to upload the monthly facility file, view it, and process errors contained in the file at the institution's premises without referring to the Palestine Monetary Authority, whose role is limited to viewing the uploaded final file, reviewing it, and deciding to accept or reject it. In this regard, we wish to emphasize the following:

• Institutions are committed to uploading the monthly financial file and processing its errors within the first five working days of the beginning of each month.
• Institutions are committed to processing all technical errors resulting from migrating the monthly financial file at an error rate of 0% of the total facility file lines.
• Institutions are committed to disclosing all facility items in the monthly facility file for borrowers, while ensuring the necessity of verifying disclosure accuracy, particularly regarding the following items:

Identity Number / Passport / Company Registration / Environment	Borrower Document Type
Facility Classification (Category)	Facility File Number
Facility Type	Account Classification
Economic Sector	Granting Flag
Granted Paid	Customer Status Assessment
Legal Procedures	Periodic Installment Type
Interest Rate	Grace Period
Last Installment Due Date	Interest Type
Date of Last Paid Installment	Number of Granted Facility Installments

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Ramallah - Palestine P.O. Box 452 | Tel: +970 2 2415250 | Fax: +970 2 2409922 | Fax: +970 2 2409922 | Tel: +970 2 2415250 | P.O. Box 452 - Ramallah, Palestine Gaza - Palestine P.O. Box 4026 | Tel: +970 8 2825292 | Fax: +970 8 2844487 | Fax: +970 8 2844487 | Tel: +970 8 2825292 | P.O. Box 4026 - Gaza, Palestine Email: info@pma.ps | Email: info@pma.ps www.pma.ps

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Palestine Monetary Authority

• After completing modification, inspection, and verification processes to ensure file completeness, the responsible employee will send the file to the Palestine Monetary Authority before the end of the time period specified in the above item.
• For guidance, please refer to the instructional guide related to migrating the monthly facility file.

Fifth: Organized Clarification Instructions for Disclosure Mechanisms for Borrowers on the Credit Information System

Based on Memorandum No. (2009/26) dated 26/05/2009, and Item Three regarding the disclosure of borrower and guarantor facility data, the following clarifications are provided:

1. Borrower Facility Repayment

To settle the obligations of disclosed borrowers on the Credit Information System database, we emphasize the following:

• If the borrower settles their entire financial obligations during the month within the disclosure periods, the institution is required, from the settlement date, to execute the financial file settlement process through the Financial Settlements screen according to the established mechanism, emphasizing the necessity to reduce the three items related to facility file settlement, namely: Granted Limit, Utilized Balance, and Unpaid Due Installments, provided that the facility settlement is verified on the institution's internal system and migrated in the monthly file.

2. Disclosure of Customer Status Assessment

Given the importance of this item in assessing the customer's credit status, accuracy in disclosing the extent of customers' compliance with repayment terms is required by determining the appropriate monthly assessment of the customer's status as of the end of each month according to Appendix No. (9) attached to the circular. We emphasize the necessity of accuracy in disclosing the customer status assessment, particularly in cases of rescheduling or restructuring, and avoiding closing rescheduled/restructured facilities and disclosing them again.

3. Disclosure of Housing Loans, Mortgages, and Facilities Granted to SMEs

• Necessity of ensuring disclosure of new facilities through the record opening screen to align with the facility's purpose by the data entry operator, classifying the facility based on its nature (SME facilities, SM; Housing and mortgage loans, MO; Personal loans, SI; Corporate loans, CO).

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Ramallah - Palestine P.O. Box 452 | Tel: +970 2 2415250 | Fax: +970 2 2409922 | Fax: +970 2 2409922 | Tel: +970 2 2415250 | P.O. Box 452 - Ramallah, Palestine Gaza - Palestine P.O. Box 4026 | Tel: +970 8 2825292 | Fax: +970 8 2844487 | Fax: +970 8 2844487 | Tel: +970 8 2825292 | P.O. Box 4026 - Gaza, Palestine Email: info@pma.ps | Email: info@pma.ps www.pma.ps

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Palestine Monetary Authority

• The conditions and definitions of Small and Medium Enterprises (SMEs) approved and agreed upon with banks and lending institutions must apply to facilities granted to the SME sector, such that facilities for enterprises "employing a maximum of 25 workers and with annual sales not exceeding $7 million" are considered granted to SMEs, provided both criteria are met and the enterprise ownership is private and individual, not a public joint-stock company.
• Classifying housing and mortgage loans as housing and mortgage loans (MO) only if the facility's purpose is for property ownership, construction, or improvement for residential purposes, not commercial or investment purposes (real estate and contracting companies).

4. Disclosure of Number of Installments and Financing Period

For the sake of accuracy in disclosure, we emphasize the necessity of distinguishing between the number of installments and the financing period. The number of installments item should be corrected to reflect the number of granted facility installments due from the customer until settlement according to the agreement schedule terms. The financing period is disclosed by adding the grace period, if any, to the number of installments.

5. Disclosure of Facility File Number for Joint Accounts

To determine the risks of facilities granted to partners of the same facility, we emphasize the necessity of unifying the borrower's and their partners' facility file number, such that the institution discloses the same facility file number for all partners in the facility.

General Provisions:

• Institutions shall cease sending the monthly financial file according to the currently established mechanism from the date, with each institution being responsible for uploading and processing financial data related to its customers according to the mechanism outlined in Item Four.
• Institutions bear the responsibility for maintaining the accuracy, currency, and comprehensiveness of data sent by them, with emphasis that the Palestine Monetary Authority will verify institutional compliance during field inspection rounds and take necessary measures to ensure preservation of the three main elements.
• The Palestine Monetary Authority will cease receiving requests related to users on the Credit Information System until April 21, 2016, in preparation for launching the developed user system.

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Ramallah - Palestine P.O. Box 452 | Tel: +970 2 2415250 | Fax: +970 2 2409922 | Fax: +970 2 2409922 | Tel: +970 2 2415250 | P.O. Box 452 - Ramallah, Palestine Gaza - Palestine P.O. Box 4026 | Tel: +970 8 2825292 | Fax: +970 8 2844487 | Fax: +970 8 2844487 | Tel: +970 8 2825292 | P.O. Box 4026 - Gaza, Palestine Email: info@pma.ps | Email: info@pma.ps www.pma.ps

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Palestine Monetary Authority

• Current user permissions remain active and valid on the developed version as created until the developed user system is activated.
• Emphasis on the provisions of Palestine Monetary Authority Circular No. (2016/46) dated March 22, 2016, regarding hardware settings for Credit Information System users (Version IV).
• All other requirements and conditions stipulated in Memorandum No. (2009/26) dated 26/05/2009, and Circular No. (2014/182) dated 17/12/2014 governing the Credit Information System remain unchanged.
• This circular takes effect from April 3, 2016, and repeals any conflicting provisions. Institutions must ensure taking adequate measures to align their status with the circular's text.

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Ramallah - Palestine P.O. Box 452 | Tel: +970 2 2415250 | Fax: +970 2 2409922 | Fax: +970 2 2409922 | Tel: +970 2 2415250 | P.O. Box 452 - Ramallah, Palestine Gaza - Palestine P.O. Box 4026 | Tel: +970 8 2825292 | Fax: +970 8 2844487 | Fax: +970 8 2844487 | Tel: +970 8 2825292 | P.O. Box 4026 - Gaza, Palestine Email: info@pma.ps | Email: info@pma.ps www.pma.ps