Circular Regarding Support for Small and Medium-Sized Enterprises No. (458/10) dated 2011/1/12

In the name of Allah, the Most Gracious, the Most Merciful

Number: 258/10
Date: 7/2/1432 AH
Corresponding Date: 12/1/2011 AD

Circular to Licensed Banks

Based on the provisions of Article (4/A) of the Central Bank of Jordan Law No. (32) of 1971 and its amendments, and Article (99/B) of the Banks Law No. (28) of 2000 and its amendments, and following Instruction No. (2004/19) on Mandatory Cash Reserves dated 25/7/2004 and our Circular No. (5654/2/2/10) dated 16/4/2009, and within the framework of the Central Bank's commitment to supporting small and medium-sized enterprises (SMEs) and enabling them to obtain the necessary financing to conduct their business, with the aim of stimulating economic growth in the Kingdom, the following is approved:

First: 100% of the outstanding balances of credit facilities granted in Jordanian Dinar for the purpose of financing small and medium-sized enterprises shall be exempted from the mandatory cash reserve in Jordanian Dinar, provided that all the following conditions are met:

1. The interest or returns charged by Islamic banks on these facilities shall not exceed the best customer lending interest rate or the best customer swap rate for Islamic banks, applied by the bank, minus (1%) throughout the duration of the facilities.

2. The size of facilities granted to a single client and related parties shall not exceed (1.5) million Jordanian Dinars.

3. These facilities shall not be exploited for the purpose of repaying existing facilities at the same bank or at any other banks.

4. The granting of these facilities shall not cause the bank to violate the provisions of the Banks Law and the instructions issued pursuant thereto.

Second: The conditions stipulated in our Instruction No. (436/5/10) dated 11/1/2011 shall be adopted for the purpose of determining the small and medium-sized enterprises referred to in the First item above.

Third: This Circular shall apply to the credit facilities referred to in the First item above granted from its date until the end of January 2012, such that the aforementioned percentage is exempted from the mandatory cash reserve in Jordanian Dinar throughout the duration of the facilities, and this exemption ceases when the reserve amount reaches the legal minimum of the reserve base.

Fourth: The Central Bank shall be provided with monthly data on the credit facilities referred to in the First item above according to the attached form, which shall be included with the mandatory cash reserve statements required pursuant to our Instruction No. (2004/19) dated 25/7/2004.

Fifth: The bank shall be responsible for the correctness and accuracy of the data contained in the attached form, and for ensuring that these facilities are granted exclusively for the purposes mentioned in the First item, under the threat of applying the provisions of Article (88/B) of the Banks Law No. (28) of 2000 and its amendments.

Please accept our highest respect,

Governor Fares Abdul Hamid Sharif

Attached -

Website: www.cbj.gov.jo • E-mail: info@cbj.gov.jo • Fax 4638889, 4634973, 4634971 • Phone 463-2-1 • P.O. Box 37 Amman 11118 Jordan

Jordanian Dinar Facilities for Financing Small and Medium-Sized Enterprises During Month ............... Months

Client Name	Utilized Facility Balance	Disbursement Date	Maturity Date	Base Amount (Islamic Return) for the Bank
Total

Notes:

• The lending base amount (or the base amount) for the best customer interest rate for Islamic banks shall be reported as of the end of the month.
• As of the end of the month, facilities granted to finance small and medium-sized enterprises during the month of .................. months shall be recorded.
• The return is calculated based on the price specified by Islamic banks.

(Alternative)
(%) ................... months
( ) ................... months

Central Bank of Jordan
CENTRAL BANK OF JORDAN