Palestine Monetary Authority

PALESTINE MONETARY AUTHORITY

Circular No. (2020/145)

To all specialized lending institutions operating in Palestine Date: Thursday, July 16, 2020

Subject: Annual Borrowing Cost Program

Following the Palestine Monetary Authority's Instructions No. (4) of 2019 regarding the Annual Borrowing Cost Program, and to facilitate access to and direct the systems developed by the Authority through a unified access mechanism, we inform you that an updated version of the Annual Borrowing Cost Program has been launched to become part of the programs under the Credit Bureau Information Systems (CBIS).

Therefore, for the purpose of using the system, specialized lending institutions are requested to:

• Circulate to the users nominated by you to manage the user permissions system under PMA Circulars No. (2016/56) dated 5/4/2016 and No. (2016/104) dated 14/6/2016, the additional permission "Calculate Annual Borrowing Cost" for users selected by the management of specialized lending institutions in accordance with the requirements of the aforementioned instructions.

• Circulate to users of the Annual Borrowing Cost Program who have been granted permissions the necessity to comply with the requirements of the aforementioned instructions, noting that the Palestine Monetary Authority will implement all measures to verify the compliance of specialized lending institutions with the content of these instructions.

Financial Stability Group Palestine Monetary Authority

Attachment: Program Usage Guidelines

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www.pma.ps

Ramallah & Al-Bireh Governorate - Palestine P.O. Box 452
Ramallah & Al-Bireh Governorate - Palestine P.O. Box 452
info@pma.ps | Fax: +970 2 2415310 | Tel: +970 2 2415251

Gaza - Palestine P.O. Box 4026
Gaza - Palestine P.O. Box 4026
Fax: +970 8 2844487 | Tel: +970 8 2825713

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Usage Guidelines

Annual Borrowing Cost Calculation Program

The user system manager at the service provider grants designated employees access permissions to the Annual Borrowing Cost Program. Subsequently, the authorized employee logs into the Credit Bureau Information Systems screen, enters the username and password, selects the main screen title "Calculate Annual Borrowing Cost", and then follows the steps below:

First: The following fields must be filled out:

• Loan/Financing Information:

  • Customer Name: Enter at least the customer's three-part name.
  • Identification Number: Enter the customer's ID number or passport number if an ID is unavailable.
  • Loan/Financing Type: Select from the pre-listed options (Personal, Property Financing, Car Purchase, Personal for Housing, Purchases, Murabaha, Ijarah ending with ownership).
  • Loan Amount: Enter the loan amount in numbers only.
  • Currency: Select from the pre-listed options (Dinar, US Dollar, Shekel, Euro).
  • Number of Installments: Enter the number of installments to repay the loan/financing.
  • Installment Frequency: Select from the pre-listed options (Monthly, Daily, Weekly, Bi-weekly, Every four weeks, Quarterly, Semi-annually, Annually).
  • Loan/Financing Disbursement Date: Enter the disbursement date manually, or click the calendar icon next to the field to select the date from the calendar.
  • First Installment Date: Enter the first installment due date manually, or click the calendar icon next to the field to select the date from the calendar.
  • Last Installment Date: The last installment date for the loan/financing appears automatically, as it is calculated automatically based on the first installment date and the number of payments.
  • Recurring Installment Value: Enter the value of the installment or recurring payment throughout the loan/financing repayment period. It is usually the same as the first installment value.

• Last Installment Value / First Installment Value: In this field, enter the value of the installment that differs from the others. Typically, the last installment value differs from the recurring installment because all differences are carried forward and settled with the last installment. If the first installment differs, select "First Installment" from the dropdown and then enter the installment value.

• Profit/Interest Rate: Enter the interest/profit rate for this loan/financing as a percentage.

• Calculation Basis: Select the interest/profit calculation method from the pre-listed options: Declining Balance, Fixed (Loan/Financing Principal).

• Loan/Financing Costs:

  • Interest/Profit Repayment Method: Select from the pre-listed options (With Installments, In Advance). The first option appears periodically with installments, as most loans/financing deduct interest with periodic installments.
  • Total Interest/Profit: Enter the total amount of interest/profit the customer will pay throughout the loan period.
  • Fee/Commission Payment Method: Select from the pre-listed options (In Advance, With Installments). The first option appears in advance, as most loans/financing deduct commissions upon disbursement.
  • Total Fees/Commissions: Enter the total amount of fees/commissions the customer will pay for the loan/financing.
  • Customer Participation in Insurance Policy: Select from the pre-listed options (None, Insurance with this Loan/Financing, Insurance paid entirely by the Bank/Institution, Part of the insurance paid by the customer). If "Part of the insurance paid by the customer" is selected, two new fields appear as follows:
    1. Life Insurance Installments Repayment: Select from the pre-listed options (In advance upon loan/financing disbursement, With Installments).

• Total Life Insurance Installments: Enter the total amount of life insurance installments the customer will pay in exchange for obtaining the loan/financing.

Second: Calculate the Annual Borrowing Cost Percentage and Print the Report

After completing the filling of all the aforementioned fields and ensuring they are filled correctly and consistently, click the "Calculate Annual Borrowing Cost" icon located at the bottom of the screen. If the entered data is correct and consistent, the calculated percentage for this loan/financing will appear, along with the original repayment schedule for this loan, which contains three columns: (Payment Number, Payment Date, and Payment Amount) for all installments of the loan/financing.

If the entered data is incorrect or inconsistent, the percentage will not be calculated, and the following warning message will appear: "Please verify periodically in addition to the loan principal from another source, Difference in value: -----".

After calculating the Annual Borrowing Cost percentage, click the "Print Report" icon to generate the detailed report, which is printed and delivered to the customer and contains the following:

• Applicant's personal data and service provider data.
• Annual Borrowing Cost percentage for this financing.
• Financing data, including (loan amount, financing type, financing term, currency).
• Pricing data, including the interest rate granted by the bank, its calculation method, and customer participation in the insurance policy.
• A table summarizing the total costs of the loan/financing.
• Signature and disclaimer.