Instructions for Project Financing under the National Self-Employment Program 'Anhad' for Licensed Banks

Number: 6/3/13229
Date: 17 Muharram, 1441 AH
Corresponding to: 16 September, 2019 AD

Instructions for Project Financing under the National Self-Employment Program "Anhad" for Licensed Banks Number (4 / 2019)

In line with the Royal Vision of combating unemployment by promoting self-employment instead of employment and empowering youth to establish developmental projects that provide them with a permanent source of income and job opportunities, the Central Bank of Jordan has decided to provide financing for the National Self-Employment Program "Anhad" in the amount of (100) million Jordanian Dinars to be lent to youth holding a membership certificate from the program through commercial and Islamic banks at convenient costs and conditions, based on the provisions of paragraph (b) of Article (39) of Central Bank Law No. (23) of 1971 and its amendments, as follows:

First: The Central Bank allocates a financing ceiling of 100 million Dinars to be lent to banks at an interest rate/return of 1% annually, for commercial and Islamic banks to re-lend/finance them to Jordanian youth participating in the National Self-Employment Program "Anhad" by developing a new lending/financing product under the name (Self-Employment Loan "Anhad") subject to the following conditions:

1. Loan/Financing Value:
   a. The upper limit of the loan/financing value is 50,000 Dinars, with a minimum value of 5,000 Dinars. b. The Central Bank may approve raising the upper limit of the loan/financing to 250,000 Dinars based on the beneficiary's request and in light of the Bank's study of the project's economic feasibility and the number of new jobs created.

2. Lending/Financing Rate:
   The Central Bank grants loans/financing to banks at a fixed interest rate/return throughout the life of the loan/financing of 1.00% annually, and banks must re-lend to eligible projects at a fixed interest rate/return expected to range from 3.50% to 4.50% annually.

3. Loan/Financing Tenor:
   Loans/financing are granted for a maximum term of seven years, including a grace period not exceeding one year.

4. Eligible Beneficiaries:
   Youth within the age group of (18-45) years, who are Jordanian nationals, subject to the following conditions:
   a. Holders of a membership certificate for the National Self-Employment Program "Anhad". b. Existing projects owned by youth that are not older than (5) years from the date of official registration, provided they have obtained a membership certificate for the National Self-Employment Program "Anhad".

It is noted that the above eligible beneficiaries may apply to benefit from the program as sole proprietorships, companies, or through partnership with legal entities, venture capital funds, or business incubators and accelerators.

5. Borrower/Financing Applicant Contribution Ratio:
   a. The borrower contributes a maximum of 20% of the loan/financing value for amounts exceeding (30,000) Dinars. b. In the case of legal partners or venture capital funds, financing is granted to the company provided that equity rights collectively do not fall below 20%.
   c. Banks may directly contribute to the capital of these companies within legally permitted ratios or through their affiliated funds and companies with open ratios according to the nature of the projects and by agreement with project owners.

6. Loan/Financing Collateral:
   a. The Jordanian Company for Loan Guarantees guarantees 85% of the loan/financing value. b. Banks may request an acceptable credit guarantor based on the Bank's assessment of the project's data and feasibility.
   c. Banks may mortgage movable and immovable assets owned by the project.

7. Targeted Sectors:
   a. All developmental productive, service, and technical sectors that provide a source of income and job opportunities. b. The program does not include consumer and personal loans.

Second: Implementation Mechanism:

1. Banks must study applications submitted for the "Anhad" self-employment loan/financing according to their approved credit policy and in accordance with the program's conditions. The borrower/financing applicant must provide the following documents to complete the application study procedures:
   a. Membership certificate for the National Self-Employment Program "Anhad". b. Copy of the borrower's ID.
   c. Company registration certificate or sole proprietorship license and trade license.
   d. Project feasibility study. e. Guarantee from the Jordanian Company for Loan Guarantees. f. Any documents the bank deems necessary for its credit decision.

2. Commercial banks must grant the loan in advance to program beneficiaries using their own funds, and banks must contact the Open Market and Public Debt Operations Department/Loan Department to confirm that no existing loan exists for the beneficiary under this program.

3. The Central Bank will record the full value of the loan/financing in the commercial bank's current account held with it within two working days from the date of receiving the properly signed request to record the loan/financing value. The request must be accompanied by collateral and loan/financing data according to the attached form, indicating the following:
   a. Purpose of the loan/financing. b. Loan/financing value.
   c. Re-lending/financing rate.
   d. Loan/financing tenor. e. Type of collateral provided and its value (for commercial banks only). f. Sector to be financed.

4. Banks must disburse loans/financing granted under this program in installments according to the progress of work and disbursement documents submitted for the project.

5. Commercial banks must provide collateral acceptable to the Central Bank against loans granted to their clients, in accordance with Article (39) of the Central Bank Law and instructions issued on this matter.

6. Interest accrued on the outstanding balance of loans granted to commercial banks will be recorded in their current accounts at the Central Bank monthly, according to the terms of granting these loans and their due dates.

7. Loan Repayment:
   a. The commercial bank undertakes to pay loan installments on their due dates. If the balance of the bank's current account at the Central Bank is insufficient to repay the loans, the Central Bank is authorized with an absolute, irrevocable power to:

• Use any available funds in our other accounts with you to settle the amounts due.
• Use any government securities or government-guaranteed securities and/or deposit certificates issued by the Central Bank available in our portfolio with you to settle the outstanding balance, accrued interest, and any expenses and commissions incurred by the bank in the collection process.
• Liquidate the value of collateral provided against this loan and bear any commissions and expenses incurred by you as a result.
  b. The bank may repay any part of the loan before the due date, provided that the Central Bank of Jordan is notified of this.

8. Banks are not allowed to change interest rates/returns on the loan/financing after disbursement and throughout the loan/financing period.

9. These instructions apply to the extent consistent with the nature of Islamic banks' operations regarding amounts deposited with them for the purpose of refinancing under this program. Additional appendices will be signed to agreements previously signed with them to include this program.

Third: The Central Bank may take any of the measures or impose any of the penalties stipulated in Article (46) of Central Bank Law No. (23) of 1971 and its amendments, in case of the bank's violation of the provisions of these instructions.

Fourth: Banks are required to provide us with monthly reports on the progress of the program according to the attached form.

Fifth: These instructions are effective from their date until the end of September 2022.

Governor
Dr. Ziad Frieze