Palestine Monetary Authority

PALESTINE MONETARY AUTHORITY

Instructions No. (1) of 2024

Regarding the Credit Portfolio of Specialized Lending Institutions

Based on the provisions of Decision No. (132) of 2011 on the Licensing and Supervision of Specialized Lending Institutions, particularly Articles (3, 21) thereof,

In accordance with the powers delegated to us,

And in pursuit of the public interest,

We have issued the following Instructions:

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(1) Article

Objective and Scope of Application

1. The provisions of these Instructions aim to reorganize and evaluate existing credit under current circumstances.
2. The provisions of these Instructions apply to all specialized lending institutions licensed by the Palestine Monetary Authority.

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(2) Article

Procedures for Dealing with Existing Loans and Financing

The specialized lending institution must comply with the following:

1. Defer or not deduct periodic installments for borrowers residing in the Gaza Strip until 2024/06/30 without interest.
2. Provide the option to defer, schedule, or structure periodic installments for borrowers residing in the West Bank until 2024/06/30 without any increase in contractual interest rates, in proportion to the borrowers' solvency in case they are directly or indirectly affected by current circumstances.
3. Do not collect any fees or commissions on deferral, scheduling, or structuring operations.
4. Provide the Palestine Monetary Authority with a detailed monthly report within the first five working days of each month starting from March of the current year, regarding the procedures applied to deal with the loan and financing portfolio.

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(3) Article

Continuous Monitoring and Assessment of Financial Impact and Expected Credit Losses

The specialized lending institution must ensure that portfolio classifications reflect the financial status and fundamental risks in a timely manner, and commit to the following:

1. Conduct continuous assessment of the extent to which indicators of significant increase in credit risk affect the portfolio, including transferring loans that are no longer viable or confirmed as non-performing to Stage 3 of Expected Credit Losses.
2. Apply mixed methodologies and mechanisms for calculating Expected Credit Losses on the loan and financing portfolio in the West Bank, in accordance with the requirements of International Standard No. (9), in addition to committing to assign a minimum weight of 60% to the most severe scenarios and 40% to medium scenarios.
3. Apply mixed methodologies and mechanisms for calculating Expected Credit Losses on the loan and financing portfolio in Gaza, in accordance with the requirements of International Standard No. (9), in addition to committing to assign a weight of 100% to the most severe scenarios.
4. Identify the economic sectors, projects, areas, and categories most affected and take this into account in the criteria for the transition of credit risk from one stage to another.
5. Include current and future variables of economic conditions in the scenarios of Expected Credit Loss calculation models.
6. Continuously monitor the repercussions of current conditions and potential scenario mechanisms on capital and liquidity.
7. Provide the Palestine Monetary Authority with a monthly report within the first five working days of each month starting from March of the current year, regarding the measures taken and the impact resulting from the provisions of this Article.

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(4) Article

General Provisions

The specialized lending institution must limit consumer financing during the current period and comply with the following:

1. Design loan programs to meet basic needs and finance owners of developmental projects to help them overcome the repercussions of the current crisis.
2. Continue to provide lending services to developmental projects to ensure the continuity of the commercial and economic cycle, within similar resources and mechanisms.

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(5) Article

Repeal

Instructions No. (1) of 2023 regarding the credit portfolio of specialized lending institutions are repealed.

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(6) Article

Implementation and Enforcement

All competent authorities must, each within their respective jurisdiction, implement the provisions of these Instructions and apply them from the date of their issuance.

Issued in Ramallah, on: 07/02/2024 AD

Dr. Firas Malham
Governor

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Ramallah & Al-Bireh Governorate - Palestine P.O. Box 452 Palestine P.O. Box - Ramallah and Al-Bireh Governorate info@pma.ps | Fax: +970 2 2415310 : Fax | Tel: +970 2 2415251 : Phone | Postal code: P6160675 : Postal Code www.pma.ps