Board of Directors Resolution No. 62 of 2020

Board of Directors Resolution No. 62 of 2020

Regarding the Regulation of Non-Performing Loans and Debt Restructuring

The Central Bank of Jordan

In the name of the Hashemite Kingdom of Jordan

We, King Abdullah II bin Al-Hussein, King of the Hashemite Kingdom of Jordan,

Having seen the Banking Law No. (10) of 1988 and its amendments;

Having seen the Central Bank of Jordan Law No. (28) of 1988 and its amendments;

Having seen the Board of Directors' Resolution No. (1) of 2020;

Having seen the recommendation of the Monetary Control Committee;

Having seen the recommendation of the Governor of the Central Bank of Jordan;

Hereby issue the following:

Article 1 Definitions In the application of the provisions of this Resolution, the words and expressions mentioned below shall have the meanings respectively assigned to them herein below, unless the context requires otherwise:

The Law: The Banking Law No. (10) of 1988 and its amendments.

The Bank: Any bank licensed by the Central Bank of Jordan to conduct banking business within the Kingdom.

The Central Bank: The Central Bank of Jordan.

Non-Performing Loan: A loan or any other credit facility granted by the Bank, where the borrower has failed to meet the payment obligations as per the agreed schedule for a period exceeding 90 days, or where the Bank has determined that the borrower is unable to meet its obligations due to financial difficulties.

Debt Restructuring: Any modification, amendment, or concession granted by the Bank to the borrower regarding the terms of the loan, including but not limited to extension of maturity, reduction of interest rates, waiver of fees, or conversion of debt into equity, in order to facilitate the repayment of the debt.

The Committee: The Monetary Control Committee of the Central Bank of Jordan.

Article 2 Scope of Application This Resolution shall apply to all banks licensed by the Central Bank of Jordan to conduct banking business within the Kingdom of Jordan.

Article 3 General Principles

1. The Bank shall establish internal policies and procedures for the identification, classification, management, and resolution of non-performing loans.
2. The Bank shall ensure that its credit risk management framework is robust and capable of detecting early signs of financial distress among borrowers.
3. The Bank shall maintain adequate provisions for expected credit losses in accordance with the accounting standards approved by the Central Bank.

Article 4 Identification and Classification of Non-Performing Loans

1. The Bank shall identify non-performing loans based on the criteria specified in this Resolution and the guidelines issued by the Central Bank.
2. The Bank shall classify non-performing loans into categories based on the level of risk and the likelihood of recovery.
3. The Bank shall review the classification of non-performing loans on a regular basis and update it as necessary.

Article 5 Debt Restructuring

1. The Bank may grant debt restructuring to a borrower who is facing financial difficulties, provided that the restructuring is likely to improve the borrower's ability to repay the debt.
2. The Bank shall conduct a thorough assessment of the borrower's financial situation and future prospects before granting debt restructuring.
3. The Bank shall document the terms and conditions of the debt restructuring agreement and ensure that they are fair and reasonable.
4. The Bank shall report any debt restructuring agreements to the Central Bank in accordance with the reporting requirements specified by the Central Bank.

Article 6 Management of Non-Performing Loans

1. The Bank shall establish a dedicated unit or team responsible for the management of non-performing loans.
2. The Bank shall develop strategies for the recovery of non-performing loans, including but not limited to negotiation with borrowers, enforcement of collateral, and sale of assets.
3. The Bank shall monitor the progress of recovery efforts and report on the status of non-performing loans to the Central Bank on a regular basis.

Article 7 Reporting Requirements

1. The Bank shall submit periodic reports to the Central Bank on the status of its non-performing loans and debt restructuring activities.
2. The reports shall include detailed information on the volume, value, and classification of non-performing loans, as well as the terms and conditions of any debt restructuring agreements.
3. The Central Bank may request additional information or clarification from the Bank regarding its non-performing loans and debt restructuring activities.

Article 8 Supervision and Enforcement

1. The Central Bank shall supervise the implementation of this Resolution by the Banks.
2. The Central Bank may conduct inspections and audits of the Banks to ensure compliance with the provisions of this Resolution.
3. In case of non-compliance, the Central Bank may take appropriate supervisory measures, including but not limited to issuing warnings, imposing fines, or restricting the Bank's activities.

Article 9 Transitional Provisions

1. Banks shall comply with the provisions of this Resolution within six months from the date of its issuance.
2. The Central Bank may grant extensions to Banks in exceptional circumstances, subject to its approval.

Article 10 Final Provisions

1. This Resolution shall be published in the Official Gazette and shall enter into force on the date of its publication.
2. All previous resolutions, decisions, and circulars issued by the Central Bank that are inconsistent with the provisions of this Resolution are hereby repealed.

Governor of the Central Bank of Jordan

Date: 20/04/2020

Reference: 2020/62

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