Regulatory Alerts2008-01-01
Instructions No. 1 of 2008 Regarding the Classification of Credit Facilities, Provisions, and Accepted Collateral
The Palestine Monetary Authority issued Instructions No. 1 of 2008 to mandate all Palestinian banks to classify credit facilities into regular, monitoring, sub-standard, doubtful, and loss categories based on days past due and borrower financial deterioration. The directive establishes mandatory specific provision percentages (ranging from 20% to 100%), strict collateral valuation discounts, and the suspension of interest and commissions on non-performing facilities, while regulating overdraft conversions, off-balance sheet treatments, and rescheduling conditions. It further requires external auditor verification of provision adequacy, outlines standardized guarantee acceptance schedules, and sets minimum risk measurement standards to ensure uniform banking sector compliance.