Instructions No. 1 of 2025 Regarding the Handling of Debt Maturities

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Palestine Monetary Authority
PALESTINE MONETARY AUTHORITY

Instructions No. (1) of 2025
Regarding the Handling of Debt Maturities

Pursuant to the provisions of Decision-Law No. (3) of 2025 regarding the regulation of loan maturities, installments, and financing lease payments, particularly Article (3) thereof, and pursuant to the provisions of Law (9) of 1997 concerning the Palestine Monetary Authority and its amendments, and pursuant to the provisions of Decision-Law (9) of 2010 concerning Banks, particularly Articles (40, 43, 72) thereof, and in accordance with the powers delegated to us, and in pursuit of the public interest, we have issued the following Instructions:

Article (1)
Objective and Scope of Application

1. The provisions of these Instructions aim to regulate the procedures for handling debts due in part or in full, their maturity dates, facility agreements, and the resulting relationships with all parties.
2. The provisions of these Instructions apply to facility and financing agreements for individuals in the Gaza Strip, and public sector employees in the West Bank.
3. The provisions of these Instructions do not apply to customers whose files and debts have been transferred to the courts.
4. The provisions of these Instructions apply to all banks licensed by the Palestine Monetary Authority to conduct banking business.

Article (2)
Procedures for Handling Loans and Finances

1. The bank shall comply with the following:
   a. Postponing the repayment schedule for all installments for borrowers in the Gaza Strip as of 2023/10/01. b. Postponing the repayment schedule for all installments or the utilized balance of the current account overdraft limit for borrowers who are public sector employees in the West Bank as of 2023/10/01.
   c. The postponement is implemented by granting the borrower a new loan/financing to which the due amounts are allocated.
   d. Subject to the provisions in clauses (c) and (e) of this Article, the collection of installments for the new loan shall commence concurrently with the maturity date of the original loan installments for borrowers whose debt burden is less than 50% of their income throughout the original loan period, and after the completion of repayment for borrowers whose debt burden exceeds 50% of their income. e. The collection of installments for loans and financing in the Gaza Strip shall commence as of 2025/07/01, with a maximum deduction limit of 50% of the transferred salary installment. f. The bank shall continue to collect installments for loans of public sector employees in the West Bank upon receipt of the salary, according to the currently applicable instructions.
2. The bank may utilize any amounts transferred to the borrower's account for loan/financing repayment without charging the borrower an early settlement fee.
3. The bank shall cancel the current account overdraft limit and the temporary current account debit limit established to address due installments.

Article (3)
Interest and Fees

1. The bank is prohibited from charging interest/return on due amounts exceeding the interbank lending rate (6M SOFR).
2. The bank is prohibited from charging any fees or charges on the schedule postponement process.
3. The bank shall cease charging late payment interest on due installments.

Article (4)
Impact of Treatments on Contracts and Customers

1. The bank may allow borrowers to reschedule or restructure debts according to the borrower's preference and repayment capacity, without requiring an upfront payment for rescheduling or restructuring, and without charging the borrower any fees or charges.
2. The bank may exceed the specified periods for loans/financing beyond those stipulated in the currently applicable Instructions.
3. The bank may allow debt burden ratios for customers opting to restructure their debts to exceed the ratios specified in the currently applicable Instructions by no more than 10%.

Article (5)
Procedures for Handling Existing Financing in Islamic Banks

The Islamic bank shall comply with the following:

1. The provisions of these Instructions are implemented in accordance with Islamic Sharia rulings.
2. In case of debt restructuring, the following options are made available to the customer:
   a. Purchasing an asset from the customer (financed or non-financed by the bank) and then re-leasing it to the customer via a lease-to-own contract, enabling the customer to utilize the amount for installment repayment and restructuring. b. Purchasing a share in an asset owned by the customer, under a diminishing partnership contract, and enabling the customer to utilize the amount for installment repayment and restructuring.
   c. Granting the customer a Tawarruq financing equivalent to the debt amount, and enabling the customer to utilize the amount for installment repayment.
   d. Not charging the customer any additional fees or charges on the restructuring process, including fees for opening Tawarruq financing transactions.

Article (6)
Unpaid Installment Portions

The bank shall comply with the following:

1. The unpaid portions of installments for public sector employees, after the implementation of these Instructions, shall be aggregated into each group equal to the monthly installment value.
2. The value of each installment group, equal to the monthly installment amount, shall be carried forward to the end of the original loan term.

Article (7)
Right of Objection

1. The bank shall notify borrowers of the details of the modifications made to debt maturity schedules via SMS or by contacting them at their contact addresses on file with the bank.
2. The borrower may, within ten days from the date of issuance of these Instructions or from the date of bank notification, object to the schedule postponement. In this case, the bank shall accept the borrower's objection, whether submitted via online banking, customer service center, or bank branches.
3. The bank shall comply with the following procedures upon receiving an objection from the borrower:
   a. Suspend the implementation of schedule postponement and grant the customer a two-week period to restructure existing facilities; otherwise, the provisions of these Instructions shall apply. b. Proceed to schedule/restructure the loan in accordance with the borrower's repayment capacity.
   c. Document the restructuring process according to legally recognized principles.

Article (8)
Repeal of Conflicting Provisions

All provisions conflicting with these Instructions are repealed.

Article (9)
Implementation and Enforcement

All competent authorities shall implement the provisions of these Instructions within their respective jurisdictions, and they apply as of the date of issuance.

Issued in Ramallah, on: 2025/01/20.

[Signature]
Yahya Shannar
Governor

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