Regulatory AlertsIsrael: lending & credit regulation
RegulatedBank of Israel regulates consumer credit; non-bank lenders operate under general law
- Lead regulator
- Bank of Israel
- Also involved
- Ministry of Justice (Consumer Protection Law) · Israel Money Laundering and Terror Financing Prohibition Authority (IMPA)
- Core law
- Banking (Service) Law, 5762-2001
- Entry capital
- NIS 1m (Credit Service Provider)
- Approval timeline
- 6-12 months for credit service provider license
- Customer assets
- Segregated in trust account
- Data protection
- Privacy Protection Law, 5741-1981 · Israel Privacy Protection Authority (IPPA)
- Sandbox
- No
The Bank of Israel (BoI) is the primary supervisor for consumer credit, regulating banking corporations and credit card companies under the Banking (Service) Law, 5762-2001. Non-bank lenders (credit service providers) must obtain a license from the BoI to operate. The regulatory framework is dense with 'Proper Conduct of Banking Business' Directives (e.g., 311A, 313, 451) governing risk, indebtedness, and fair conduct. The market is highly concentrated, with the BoI actively managing credit risk and market concentration.
Which licence do you need?
| Your activity | Requirement | Capital | Timeline | Authority |
|---|---|---|---|---|
| Consumer lending | LicenceCredit Service Provider License[1] Required for non-bank consumer lending; banks exempt. | NIS 1m | 6-12 months | Bank of Israel |
| SME / commercial lending | LicenceCredit Service Provider License[1] Non-bank SME lending requires license; banks operate under banking laws. | NIS 1m | 6-12 months | Bank of Israel |
| Microfinance | LicenceCredit Service Provider License[1] Same licensing regime as other non-bank credit services. | NIS 1m | 6-12 months | Bank of Israel |
| Buy-now-pay-later | LicenceCredit Service Provider License[1] Treated as consumer credit; BoI oversight increasing. | NIS 1m | 6-12 months | Bank of Israel |
| P2P lending platform | LicenceCredit Service Provider License[1] Platform facilitating lending requires license. | NIS 1m | 6-12 months | Bank of Israel |
| Credit bureau / scoring | RegistrationCredit Bureau License[1] Credit bureaus are regulated under the Credit Bureau Law. | — | — | Bank of Israel |
| Debt collection | LicenceCredit Service Provider License[1] Debt collection is part of credit services; requires license. | NIS 1m | 6-12 months | Bank of Israel |
New — what changed recently
- 2025-04-06Revision of Directive 203 and 329 — Imposed 150% risk weight on project finance for residential developments to mitigate construction credit risk.[1]
- 2025-02-04LEX10–LEX40 Framework — Replaced Directive 313 with new large exposure framework aligning with Basel Committee standards.[2]
- 2024-12-31Swords of Iron War Adjustments — Extended temporary regulatory reliefs for banking corporations and payment service providers.[3]
Market-entry checklist
- 1Obtain Credit Service Provider LicenseApply to Bank of Israel with NIS 1m minimum capital and detailed business plan.
- 2Implement Proper Conduct DirectivesAdhere to Directive 311A for consumer credit management and fair marketing.
- 3Establish Credit Risk FrameworkComply with Directive 203 and 311 for credit risk assessment and management.
- 4Register with IMPA for AMLRegister as a reporting entity with the Israel Money Laundering and Terror Financing Prohibition Authority.
- 5Ensure Data Privacy ComplianceComply with the Privacy Protection Law and regulations of the Israel Privacy Protection Authority.
Sources
- Revision of Directive 203 on Credit Risk Standardized Approach and Directive 329 on Housing Loan Limitations · 2025-04-06
- Regulatory framework for measuring and controlling large exposures (LEX10–LEX40) · 2025-02-04
- Adjustments to Proper Conduct of Banking Business Directives for the Swords of Iron War · 2024-12-31