Instructions No. (15) of 2023 Regarding the Sustainability (+) Fund

Instructions No. (15) of 2023
Regarding the Sustainability (+) Fund

Based on the provisions of Law Decree No. (9) of 2010 concerning Banks, particularly Articles (40 and 72) thereof, In accordance with the powers delegated to us, And in pursuit of the public interest, We have issued the following Instructions:

Article (1)
Definitions

The words and phrases appearing in these Instructions shall have the meanings specified below, unless the context indicates otherwise:
Credit: Loans or financing granted by the commercial bank or Islamic bank.
Incentives: The cash rebate program provided by the Palestine Monetary Authority to beneficiaries of financing programs committed to repayment according to the specific instructions governing them.

Article (2)
Objective and Scope of Application

1. The provisions of these Instructions aim to inject liquidity into the economy to finance developmental projects and contribute to revitalizing the national economy within the framework of achieving sustainable development goals.
2. The provisions of these Instructions apply to all banks licensed by the Palestine Monetary Authority to conduct banking business in Palestine.

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Article (3)
Establishment of the Sustainability (+) Fund

3. The Palestine Monetary Authority shall establish, pursuant to these Instructions, a fund named the "Sustainability (+) Fund" with a value of (500) five hundred million shekels, aimed at providing financing to various economic sectors through the following financing programs:
   a. Recovery Program for Affected Projects. b. Healthcare Sector Financing Program.
   c. Agricultural Sector Financing Program.
   d. Renewable Energy, Efficiency, and Environmental Conservation Financing Program. e. Any other sector approved by the Palestine Monetary Authority.

Article (4)
Financing Programs

The bank must ensure that credit directed through the Sustainability (+) Fund is allocated exclusively to the following programs and objectives:

1. Recovery Program for Affected Projects from the current crisis, providing necessary liquidity for the following purposes:
   a. Recovering from the political and economic crisis impacts on affected and most severely affected projects. b. Providing raw materials and necessary supplies to sustain project operations and develop products.
   c. Preserving and investing in human capital.
   d. Maintaining the production cycle and targeting new sectors. e. Addressing liquidity shortages.
2. Healthcare Sector Financing Program, for the purpose of providing necessary liquidity to finance the following:
   a. Improving the level of provided healthcare services. b. Developing medical centers and hospitals and establishing new departments.
   c. Retaining the medical staff and the ability to attract expertise.
   d. Expanding services to include chronic disease-related services and localized services. e. Purchasing necessary medical equipment for healthcare services.

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3. Agricultural Sector Financing Program, for the purpose of providing necessary liquidity to finance the following:
   a. Investment and development in the agricultural sector, including the use of modern agricultural technologies and improving production rates. b. Agricultural projects affected by political, economic, and environmental fluctuations.
   c. Development and investment in the food industry sector.
   d. Maintaining the production cycle and targeting new agricultural projects. e. Implementing sustainable and modern agricultural practices to reduce the environmental impact resulting from agricultural activities.
4. Renewable Energy, Efficiency, and Environmental Conservation Sector Financing Program, for the purpose of providing necessary liquidity to projects to finance the following:
   a. Renewable energy production projects and electricity generation using solar cells and any other environmentally friendly means. b. Sectors and projects aimed at reducing pollution levels, conserving the environment, and achieving a higher level of self-sufficiency.
   c. Transitioning to clean energy sources, reducing reliance on traditional energy sources, and reducing greenhouse gas emissions with negative environmental impacts.
   d. Projects aimed at reducing consumption and improving energy efficiency across various sectors such as construction, industry, and transportation. e. Energy storage projects.

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Article (5)
Credit Ceilings and Repayment Periods

The bank must adhere to the maximum credit ceiling and repayment periods stated in the table below:

Liquidity Provision Programs	Financing Ceiling per Project	Repayment Period	Grace Period
Program			Grace period is included in the repayment period
Recovery Program for Affected Projects	Very Small Projects: 200,000 shekels	(5) five years	(12) twelve months
	Small Projects: 400,000 shekels
	Medium Projects: 600,000 shekels
	Large Projects: 2 million shekels
Healthcare Sector Financing Program	20 million shekels	(8) eight years	(24) twenty-four months
Agricultural Sector Financing Program	5 million shekels
Renewable Energy and Environmental Conservation Sector Financing Program	20 million shekels

Article (6)
Credit Granting Conditions

1. When granting credit to the targeted economic sectors, the bank must adhere to the following conditions:
   a. The borrower must be Palestinian, and the financing must be used exclusively in Palestine. b. The project or establishment must be an official client and licensed by the competent authorities or possess a tax file.
   c. Project owners must possess sufficient experience and knowledge in the field of the financing purpose, and the project must aim to expand the existing project or open new production lines. If the project is new, the financing value must not exceed 50% of the total project cost.
   d. A report must be provided regarding the damages resulting from the political and economic crisis impacts and the financing's role in addressing these impacts, along with evidence proving the project's importance in contributing to sustainable development.

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e. A study must be provided to assess the environmental impact of projects related to the renewable energy and environmental conservation program. f. Studies and credit analysis must be conducted for targeted projects according to the bank's credit policy, and it must be verified that credit requests align with the provisions of these Instructions. g. The bank must provide the Palestine Monetary Authority with the credit study of the project prepared by the bank. h. The project must be technically and economically viable.
i. The bank must take all necessary measures to reduce its credit risks and base its credit analysis on the expected cash flows of the projects, taking into account the contribution of the granted credit to achieving sustainable development and supporting the production cycle.
j. The bank is prohibited from deducting cash insurance from the credit amount granted to targeted projects within the program. k. An approval request for granting credit must be submitted if its value exceeds (400) four hundred thousand shekels, according to Annex No. (1).
2. The bank must obtain the Palestine Monetary Authority's approval if the borrower is a related party.
3. Providing a recommendation from the Chamber of Commerce, the Union of Chambers of Commerce, or the Private Sector Coordinating Council is an additional advantage that helps facilitate the project's access to financing.

Article (7)
Financing Programs Implementation Mechanism

1. Credit up to a ceiling of (400) four hundred thousand shekels shall be implemented by the bank based on its credit decision, which must comply with the credit conditions stipulated in these Instructions. The bank shall notify the Palestine Monetary Authority of the credit implementation to transfer the amount to its account held with the Authority, according to Annex No. (2).
2. Credit exceeding the ceiling of (400) four hundred thousand shekels shall be implemented after the bank obtains the Palestine Monetary Authority's approval for the financing. In this case, the bank must provide the Authority with all supporting documents and papers for the request according to the provisions of Article (6) of these Instructions.
3. The Palestine Monetary Authority shall transfer the credit value if it is equal to or less than (400) four hundred thousand shekels within one business day, and transfer the value of credit exceeding (400) four hundred thousand shekels within two business days, after approving the credit request.

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4. Installments shall be deducted from the bank's account held with the Palestine Monetary Authority at the end of each month, taking into account the grace period granted to projects.

Article (8)
Interest or Return and Commissions

1. The bank must adhere to the following:
   a. Grant credit at an interest rate or return of 5% reducing for all programs, according to the periodic bulletin published by the Palestine Monetary Authority. b. The interest rate or return margin charged by the bank on the credit, after taking into account guarantee costs and cost of funds, must not exceed 2% annually.
2. The Palestine Monetary Authority shall issue a quarterly bulletin on the cost of funds it will charge the bank for this purpose.
3. The bank may collect a one-time credit granting commission with a maximum of 0.5%.
4. The bank may apply its pricing policy to irregularly repaid credit and collect late payment interest or returns on overdue installments in addition to the contractual interest, with a maximum of 2% annually, provided that this is included in the credit contract.
5. The bank is prohibited from modifying or changing the interest rates, returns, or profit margins on the granted credit.
6. The Palestine Monetary Authority may grant some beneficiaries of the financing programs outlined in these Instructions cash back incentives with a maximum of 5% of the credit principal, upon full repayment, according to instructions to be issued later by the Authority on this matter.

Article (9)
Disclosure and Reports

1. The bank must provide the Palestine Monetary Authority monthly, according to Annex (3), with the value of granted, outstanding, and repaid credit, portfolio risk level, employment level, production, and any other data indicating the credit's contribution to sustainable development or maintaining/developing the production cycle or employment level.
2. The bank must disclose credit granted from the Sustainability (+) Fund on the credit information system according to the specific coding for it.

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Article (10)
Excluded Projects

The bank is prohibited from granting credit for any of the following purposes:

1. Personal and consumer loans in all their forms.
2. Purchasing land and real estate in all their forms and housing improvement loans.
3. Any financial transactions not related to operational activities, such as those related to acquisitions, mergers, securities trading, and ownership changes, as well as financing the purchase of trademarks and intellectual property rights.
4. Settling obligations, debts, and other similar activities.
5. Activities and projects outside Palestine.
6. Any projects related to the production of alcohol, tobacco, and the promotion of gambling, lotteries, and similar activities.
7. Activities prohibited by prevailing legislation.
8. Projects benefiting from the Sustainability Fund at the date of application submission.

Article (11)
General Provisions

1. The bank must maintain statistics at the end of each financial quarter regarding the economic sectors targeted pursuant to these Instructions.
2. The bank must verify that the granted credit is utilized for the specified purposes and in accordance with the financing programs outlined in these Instructions, and shall bear full responsibility in case of violating granting conditions. The Palestine Monetary Authority may freeze the credit value in the bank's account upon discovering a violation of these Instructions' provisions.
3. The bank must document its right to apply its pricing policy on the granted credit if it is proven that the granted credit was utilized contrary to these Instructions' provisions.
4. The bank must adhere to Cabinet Decision No. (11/115/18/M.W/A.M) for the year 2021 regarding the definition and national classification of micro, small, medium, and large economic establishments.
5. The Islamic bank must adhere to Islamic Sharia provisions in the credit implementation procedures pursuant to these Instructions.

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6. The bank must adhere to the Customer Due Diligence (Know Your Customer) instructions issued by the Palestine Monetary Authority.
7. Credit granted from the Sustainability (+) Fund shall be assigned a preferential risk weight of 50%.
8. Credit shall be granted pursuant to these Instructions in shekels only.
9. Applications shall be submitted and received through bank offices and branches and through the "Manasati" platform website. Banks are committed to promoting and marketing the programs and participating in advertising campaigns.

Article (12)
Penalties

Anyone who violates the provisions of these Instructions shall be punished in accordance with the provisions of Law Decree No. (9) of 2010 concerning Banks.

Article (13)
Implementation and Enforcement

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

Issued in Ramallah, on the date: 29/11/2023 AD

Dr. Firas Malham
Governor
[Signature]

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[Contact information at the bottom of pages]
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