Collection Guidelines for Microfinance Companies

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

[Central Bank of Jordan Logo]

Number: 4/27/2023
Date: 9/6/1444 AH
Corresponding to: 2/1/2023 AD

Circular to Microfinance Companies Operating in the Kingdom

Greetings,

Attached herewith are the "Collection Guidelines for Microfinance Companies," which aim to regulate the collection mechanism and communication with customers, protect their rights, and ensure transparency and fairness in collection operations. In this regard, we emphasize the necessity of preparing a binding policy that complies with these guidelines as a minimum and providing us with a copy thereof after its approval by the Board of Directors/Board of Managers, provided that it becomes effective as of April 1, 2023.

Please accept our highest respect,

Governor
Dr. Adel Al-Sharkas
[Signature]

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Form (1/1/09)
P.O. Box 37 Amman 11118 Jordan • Tel 4630301 Fax 4628889 • Website: www.cbj.gov.jo • Email: info@cbj.gov.jo

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CENTRAL BANK OF JORDAN
البنك المركزي الأردني

[Central Bank of Jordan Logo]

Central Bank of Jordan
Financial Consumer Protection Department

Collection Guidelines for Microfinance Companies

Form (1/1/09)

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CENTRAL BANK OF JORDAN
البنك المركزي الأردني

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

• Documented communication methods that the company is entitled to use when communicating with customers or their guarantors.
• Controls for communicating with customers, and the number of times to communicate during the month.
• Practices that the company is prohibited from engaging in when collecting debts.
• Procedures followed in case the customer objects to the amounts requested from them by the company.
• Procedures for collection 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 in a way that allows microfinance companies to follow clear and specific procedures that protect the rights of all parties involved, ensure transparency and fairness in collection operations, and reduce abuse and undue pressure. Each company must prepare a binding collection policy that includes at least what is stated in these guidelines, and apply it in accordance and concurrently with related legislation.

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

Article (4): Controls and Procedures
A. Communication Methods with Customers:
Microfinance companies must make sufficient effort to communicate with customers and/or guarantors before taking any legal action against them, while adhering to limiting the documented communication methods that the company is entitled to use to the following:

1. Phone calls.

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Form (1/1/09)

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CENTRAL BANK OF JORDAN
البنك المركزي الأردني

2. Text messages and notifications, for example (SMS), company 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 methods, provided that the company documents that the customer could not be reached through those methods.

B. Controls for Communicating with Customers: The company must observe the clauses below when communicating with customers, provided that all procedures taken in this regard are documented:

1. Phone calls:

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

2. Text messages and email: The message text must include, as a minimum, the company name, the purpose of the message, contact numbers, and working hours.
3. Personal visit to the customer: The visit should be from Saturday to Thursday between 9:00 AM and 5:00 PM, while ensuring not to disclose any information related to the customer's indebtedness if any other person is present.

C. Practices Prohibited for the Company During Collection: In addition to the prohibited practices stated in the provisions of the effective Financial Consumer Protection Instructions for the Microfinance Sector, the collection officer is prohibited from doing any of the following:

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

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Form (1/1/09)

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CENTRAL BANK OF JORDAN
البنك المركزي الأردني

2. Contacting customers at their workplace numbers (unless it is impossible to reach the loan parties through other means, with emphasis on observing privacy and maintaining the confidentiality of any information related to the customer's indebtedness and not disclosing it if any other person is present).
3. Communicating with any third party for the purpose of pressuring the customer or demanding the debt from them.
4. Publishing any list of names of defaulting payers, except for official publication and disclosure related to legal cases.

D. Customer Objection to Requested Amounts: If there are outstanding payments due from the customer, they have the right to object to the amount requested from them. 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. Not communicate with the customer regarding the payment of the objected-to unpaid amounts until the objection is processed.

E. Procedures for Collection from Customer Accounts: If the customer authorizes the company to deduct the monthly installment amount from their bank account and/or any entity from which deductions can be made, the company must specify the deduction date in advance according to what is specified in the repayment schedule, ensuring it aligns with the customer's monthly salary deposit date.

F. Procedures for Dealing with Defaulting Customers:

1. The company must consider the customer's circumstances when they request debt rescheduling if a mandatory change in the customer's financial circumstances is proven.
2. If the customer is willing to pay any installment and is unable to pay the subsequent due installment, the payment will be accepted without requiring payment of the full outstanding amount.

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Form (1/1/09)

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CENTRAL BANK OF JORDAN
البنك المركزي الأردني

Article (5): General Provisions
A. If the company contracts with a third party for debt collection¹, the company is responsible for ensuring the third party's adherence to the collection policy prepared by the company, in addition to ensuring their commitment to maintaining the confidentiality of customer data. B. If the collection officer receives any payment from the customer outside the company's premises or branches, they must document it through payment receipts issued by the company, which must be in two copies (one copy for the customer and one copy for the company's files).
C. The department responsible for collection procedures must be periodically reviewed by the company's compliance department to ensure the soundness of the procedures and their compliance with relevant legislation.
D. The company must do the following:

1. Establish a specific mechanism for handling collection complaints, outlining the procedures taken in this regard.
2. Conduct periodic reviews of collection procedures to improve them and align them with relevant governing instructions.
3. Circulate the company's collection policy to collection officers for their adherence.
4. Provide necessary training to collection officers on customer protection principles and transparent dealing.

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¹ A third party may be used to collect the company's debts, provided that they are a lawyer/law firm where all partners are lawyers.

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Form (1/1/09)