Regulatory Alerts2024-06-30
Added · Updated
Instructions for Classification of Credit Exposures and Calculation of Impairment Provisions No. (8/2024)
The Central Bank of Jordan issued new instructions, effective January 1, 2025, for all banks operating in the Kingdom, branches of Jordanian banks, and subsidiary banking companies operating abroad. These instructions define three categories for credit exposures: Acceptable Risk (Performing), Under Monitoring (Performing), and Non-Performing, with specific criteria for each, including overdue periods (e.g., 30-89 days for Under Monitoring, 90+ days for Non-Performing) and overdraft limits. They also detail conditions for restructuring and rescheduling, setting maximum grace periods of 18 months for restructuring and 12 months for rescheduling, and limiting repayment periods for restructured/rescheduled corporate exposures to 10 years. Furthermore, the instructions mandate specific impairment provision percentages for non-performing exposures (25% for substandard, 50% for doubtful, 100% for loss) and 5% for under monitoring exposures, with provisions for collateralized exposures and those guaranteed by the Jordanian Loan Guarantee Company.
Central Bank of Jordan CENTRAL BANK OF JORDAN
Number: 10 / 1 / 9887 Date: 24 / 12 / 1445 AH Corresponding to: 30 / 6 / 2024 AD
Instructions for Classification of Credit Exposures and Calculation of Impairment Provisions No. (8/2024)
In the framework of the Central Bank's endeavor to continue keeping pace with the application of best international banking practices in line with the core principles for effective banking supervision issued by the Basel Committee on Banking Supervision, it has been decided to issue these instructions, which shall come into effect on 2025/1/1.
Governor Dr. Adel Al-Sharkas
Central Bank of Jordan CENTRAL BANK OF JORDAN
Contents
| Subject | Page |
|---|---|
| Introduction | (2) |
| Article (1): Mandate | (2) |
| Article (2): Scope of Application | (2) |
| Article (3): Classification of Credit Exposures | (3) |
| Article (4): Amendment of Contractual Terms with Customers | (6) |
| Article (5): Provisions and Conditions for Transfers Between Credit Exposure Classification Categories and Probation Periods | (8) |
| Article (6): Calculation of Impairment Provisions | (10) |
| Article (7): Provisions for Derecognition of Credit Exposures from the Statement of Financial Position | (12) |
| Article (8): Responsibility of the Board of Directors and Executive Management | (13) |
| Article (9): General Provisions | (16)\ |