Regulatory Alerts2017-04-09
Added · Updated
Instructions for Monetary Fines on Violations of Credit Concentrations and Foreign Currency Facilities No. (2005/23)
The Central Bank of Jordan imposes monetary fines on banks for violations of credit concentration and foreign currency facility instructions, effective from December 2005 data. Fines range from 0.5% to 10% of the excess amount for various breaches, including exceeding maximum credit limits for related parties, clients, or total concentrations, and granting facilities to specific individuals or entities. Additionally, lump-sum fines from 2500 to 40000 are levied for violating maximum limits on total working credit, current account overdrafts, direct real estate credit, and foreign currency facilities. Unrectified violations within three months incur doubled fines, and after six months, the bank's regulatory capital is reduced by the excess amount.
Form (11/01/01)
In the name of Allah, the Most Gracious, the Most Merciful
[Central Bank of Jordan Logo]
Number: 10/3/3/12072 Date: 19/10/1426 AH Corresponding to: 21/11/2005 AD
Greetings,
Referring to the Instructions for Monetary Fines on Violations of Credit Concentrations and Foreign Currency Facilities dated 2005/11/6, please consider the number of these instructions to be (2005/23) and not (2005/22).
With utmost respect,
Central Bank of Jordan [Signature]
Circulars Book N 8
P.O. Box 37 • Amman 11118 Jordan • Tel 4630301 • Telegram Bankmarkazi / Amman • Telex 21250, 21476, 21766 • Fax 4638889, 4639730
Form (11/01/01)
In the name of Allah, the Most Gracious, the Most Merciful
[Central Bank of Jordan Logo]
Number: 10/3/3/11574 Date: 4/10/1426 AH Corresponding to: 6/11/2005 AD
Instructions for Monetary Fines on Violations of Credit Concentrations and Foreign Currency Facilities No. (2005/23) Issued by the Central Bank of Jordan Pursuant to the provisions of Article (99/b) of the Banks Law
Based on the provisions of Article (88/b/4) of the Banks Law No. (28) for the year 2000, and in view of the importance of banks' adherence to the prescribed credit ceilings in all its forms, due to the credit risks resulting from exceeding these ceilings, and based on the decision of the Central Bank Board of Directors No. (108/2005) dated 2005/10/24, the following has been decided: -
First: Imposing a monetary fine for violating the Instructions for Credit Concentrations and Foreign Currency Facilities as follows: - A - (2%) of the excess credit value over the maximum allowed for each of the following: -
- Related parties with the bank collectively.
- Bank executives and/or executives of its subsidiaries.
- Any subsidiary of the bank.
- Bank employee funds or funds of its subsidiaries' employees.
2- (1%) of the excess credit value over the maximum allowed for the client or group of related clients. 3- (5%) of the excess credit value over the maximum allowed for the bank's total credit concentrations.
Central Bank of Jordan
B/ 1- (10%) of the utilized facilities balance in case facilities are granted to the bank's auditor or its lawyer or its legal advisor under a general power of attorney or an annual contract, or in case any of them guarantees one of the bank's debtors. 2- (5%) of the utilized facilities balance in case direct facilities are granted in Jordanian Dinar or foreign currencies to any person not engaged in activity within the Kingdom. 3- (2%) of the utilized facilities balance in case foreign currency facilities are granted to non-exporting economic activities.
C- (0.5%) of the undeclared amounts - or incorrectly declared amounts - in case of not declaring banking risks fully or partially.
Second: Imposing a lump-sum monetary fine according to the categories below in case the bank violates any of the following: A- The maximum limit for total working credit granted to the ten largest clients of the bank in the Kingdom. B- The maximum limit for credit granted as current account overdraft. C- The maximum limit for direct working credit granted for real estate development. D- The maximum limit for facilities granted in foreign currencies within the Kingdom in Jordanian Dinar.
| Exceeding the prescribed percentage | Monetary Fine |
|---|---|
| Less than 10% | 2500 |
| From 10% - less than 25% | 5000 |
| From 25% - less than 50% | 10000 |
| From 50% - less than 100% | 20000 |
| 100% or more | 40000 |
Third: The month is considered the unit for recording violations and imposing monetary fines.
Form (09/01/1)
Central Bank of Jordan
Fourth: A- The monetary fine shall be doubled if the violation is not rectified within three months from the date of its detection and for a subsequent period of three months.
B- If the violation is not rectified within six months - as explained above - from the date of its detection, the bank's regulatory capital shall be reduced - for the purposes of applying credit concentration instructions - by an amount equivalent to that excess, while continuing to impose the doubled monetary fine.
Fifth: A- These instructions shall be effective from the data of December/2005 and any other instructions that contradict them shall be cancelled, including item (Sixteenth/10) of our instructions No. (2001/9) dated 2001/8/1 related to the continuation of applying explanations imposed on excesses.
B- What is stated in (A) above is excluded regarding the violation of the current account overdraft ratio until the end of the compliance period specified in our circular No. (3/2/10/16009) dated 2002/10/6.
Emphasizing that the tenth of each month is the last deadline for providing us with banking risk data, and the fifteenth of each month is the last deadline for providing us with credit concentration data.
With utmost respect,
[Signature] Governor Dr. Umayya Toukan
Form (09/01/1)