Palestine Monetary Authority

PALESTINE MONETARY AUTHORITY

Circular No. (2014/58)

To all banks operating in Palestine
Date: Tuesday, April 29, 2014

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Subject: Development of the Credit Information System - Clarification Circular

With reference to Palestine Monetary Authority Circulars No. (2014/11) dated January 20, 2014 and No. (2014/50) dated April 14, 2014, concerning the development of the Credit Information System (Version III), and following the field visits conducted at banks and lending institutions during the period from April 15 to April 28, 2014, to follow up on taking necessary measures to facilitate the development process, the following clarifications address the inquiries and observations discussed during the field visits:

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1. Disclosure of Guarantee and Revolving Credit Limits

Disclosure of guarantee/revolving credit limits shall be made according to the following mechanism:

• Disclose only the guarantee/revolving credit limits granted to the borrower and update the existing balance with each utilization
  from the guarantee/credit limit.

• In the event of issuing guarantees/credits in multiple currencies from the same limit, all currencies shall be valued according to the currency of the granted limit.

• In the event the borrower is granted credits/guarantees in different currencies under separate administrative approvals, each limit shall be disclosed separately.

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2. Disclosure of Revolving Purchase Limits

To avoid duplicate disclosure of utilization transactions on revolving purchase limits, which negatively affects the borrower's credit classification since each utilization of the limit is read as a new credit grant to the borrower, the same disclosure mechanism for guarantee and revolving credit limits outlined in Item 1 above shall be adopted when disclosing revolving purchase limits.

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3. Disclosure of Facility Guarantees

For the purpose of regulating the disclosure of facility guarantees, and given cases where facilities are granted with more than ten guarantors, which may appear in Group Lending loans, the guarantor disclosure fields have been expanded to allow disclosure of all guarantors for a single facility regardless of the number.

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4. Disclosure of Non-Performing Facilities (Transferred to Legal)

To address non-performing facilities (non-working facilities) as facilities where disclosing all their components is difficult due to challenges in communicating with borrowers, the mandatory requirement for facilities classified as non-performing (Legal Action (A) and Borrower Status Assessment (9)) will be removed. Instead, the components of non-performing facilities shall be disclosed based on the data available in the borrower's file.

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5. Disclosure of Interest Rate and Interest Type

Since banks do not charge interest on certain types of facilities (Guarantees F006, Revolving Credits F008, and Overdraft Accounts F003), banks are permitted to disclose the interest rate item in the financial file as a value of (zero), while disclosing the interest type as code (9 - No Interest) in accordance with Annex No. (12) attached to the circular.

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6. Disclosure of Total Enterprise Assets

For the purpose of disclosing total assets of small and medium enterprises, and given that an enterprise may receive more than one facility in different currencies from the same bank, the total assets of the enterprise shall be disclosed valued in US Dollars regardless of the currency of the granted facilities.

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7. Disclosure of Enterprise Geographic Classification

The geographic classification of the enterprise shall be disclosed based on the geographic region to which the enterprise's location, town, or village belongs, in cases where the location differs from that specified in the instructions.

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General Provisions

• The first five working days of May shall be considered the submission period for the developed file in accordance with the requirements of the circulars referenced
  at the beginning of this circular, for the purpose of completing the review process of the new file.

• Banks shall continue to disclose the borrower's financial file according to the current file structure in parallel with the disclosure of the new file according to the developed file structure, until instructions are issued to cease operations under the current version.

• For the purpose of disclosing the new demographic data required on borrower files (Income, Income Currency, National ID or Social Security for non-residents, Borrower Status for public sector employees) and on small and medium enterprise files (Geographic Classification, Total Enterprise Assets, Owner ID Number and Owner Nationality), we wish to emphasize that data modification will be done only once through an Excel file for borrowers and another for small and medium enterprises containing the items mentioned above, along with ID/Passport/Registration Number, Nationality, and Facility Number, to be migrated by us as is until the end of April 2014.

• For the purpose of reporting personal data of granted facilities, the personal files mentioned in the previous point shall be submitted, covering only new facilities until the period prior to the official launch of the new version, which will be specified in a subsequent circular.

• Based on the foregoing, all banks are requested to adopt the attached clarifications and modifications for disclosure purposes and complete the development requirements to align with the text of this circular.

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Public Relations and Market Officers Department Palestine Monetary Authority

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www.pma.ps

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

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Annex No. (12)

Interest Type

Interest Type Applied to the Facility:

1	Fixed	.1
2	Variable	.2
3	Flat	.3
9	No Interest	.4