Palestine Monetary Authority

PALESTINE MONETARY AUTHORITY

Instructions No. (2) of 2025

Regarding the Amendment of Instructions No. (2) of 2021 Concerning the Classification of Loan and Financing Portfolios and the Formation of Provisions

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

After reviewing Instructions No. (2) of 2021 Concerning the Classification of Loan and Financing Portfolios and the Formation of Provisions,

In accordance with the powers vested in us,

And in pursuit of the public interest,

We have issued the following Instructions:

Article (1)

Definition

The Original Instructions: Instructions No. (2) of 2021 Concerning the Classification of Loan and Financing Portfolios and the Formation of Provisions.

Article (2)

Amendment of Article (4) of the Original Instructions

The text of Paragraph (2) of Article (4) of the Original Instructions regarding the Non-Performing Portfolio is replaced with the following text:

2. Loans and financings and the necessary provisions against them shall be classified in accordance with the provisions of Instructions No. (3) of 2018 Regarding Guidelines for Implementing International Financial Reporting Standard No. 9 "IFRS 9". Distressed loans and financings from the non-performing portfolio shall be classified in the following cases:

a. Loan and financing portfolios where the due date for one or more installments of the principal or interest or returns has passed for a period ranging from 181 days to 270 days, and a provision of 25% shall be formed against them.

b. Loan and financing portfolios where the due date for one or more installments of the principal or interest or returns has passed for a period ranging from 271 days to 360 days, and a provision of 50% shall be formed against them.

Article (3)

Amendment of Article (5) of the Original Instructions

The text of Article (5) of the Original Instructions regarding Suspended Interest and Returns is replaced with the following text:

Lending institutions must suspend interest, returns, fees, and commissions due or received in advance on loans and financings that are not settled after 181 days have passed from the due date of one or more installments of the principal of the loan or financing, until the full settlement of the principal for the due installments. These amounts shall be recorded in a separate account so as not to be included in the revenue account.

Article (4)

Amendment of Article (10) of the Original Instructions

The text of Paragraph (2) of Article (10) of the Original Instructions regarding Excluded and Written-off Loans and Financings is replaced with the following text:

2. The guidelines of International Financial Reporting Standard No. 9 "IFRS 9" shall apply regarding excluded and written-off loans and financings. (Write-off)

Article (5)

General Provisions

Specialized lending institutions are prohibited from recovering any provisions and reversing them against profits without obtaining prior approval from the Palestine Monetary Authority.

Article (6)

Repeal of Conflicting Provisions

All provisions conflicting with the articles of these Instructions are repealed, taking into account Instructions No. (3) of 2025 Regarding Procedures for Dealing with Loan and Financing Portfolios in the Gaza Strip.

Article (7)

Implementation and Enforcement

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

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Issued in Ramallah, on the date: 30/09/2025 AD

Yahya Al-Shennar
Governor

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Note:
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