Palestine: lending & credit regulation

Regulated

Lending & consumer credit regulated by PMA under Law No. 3 of 2025; strict Sharia compliance and debt relief measures

Lead regulator:: Palestine Monetary Authority
Key law:: Law No. (3) of 2025 Regarding the Regulation of Loan Maturities, Installments, and Financial Leasing Payments
Last updated:: 2026-07-12

The Palestine Monetary Authority (PMA) serves as the primary regulator for all lending and consumer credit activities, operating under the framework of Law No. (3) of 2025 which empowers the PMA to regulate loan maturities and installments to ensure financial stability. The regulatory environment is characterized by a dual focus on strict Sharia compliance for Islamic financing and extensive debt relief measures for borrowers affected by economic disruptions, particularly in the Gaza Strip and among public sector employees.

Licensing is required for banks and specialized lending institutions, with the PMA issuing detailed instructions on credit granting determinants, borrower classification, and provisioning. Recent regulatory direction emphasizes responsible lending, prohibiting unauthorized fees and third-party brokerages, while mandating periodic reviews of credit portfolios and risk assessment frameworks.

Notable restrictions include caps on salary deduction rates for public sector employees, prohibitions on extending credit to distressed debtors without approval, and strict reporting requirements for credit information systems. The PMA actively intervenes to restructure debts, defer installments, and manage liquidity shortages, reflecting a highly interventionist stance to protect consumers and maintain systemic stability.

Who regulates

Palestine Monetary Authority
Primary supervisor of banks and specialized lending institutions; issues circulars and instructions on lending practices, credit classification, and debt relief.
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Core laws & rules

Law No. (3) of 2025 Regarding the Regulation of Loan Maturities, Installments, and Financial Leasing Payments (2025)
Empowers the Palestine Monetary Authority to regulate loan maturities, installments, and financial leasing payments to ensure financial stability and protect customers and institutions.
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Instructions No. (3) of 2026 on Amending Instructions No. (2) of 2015 Regarding Credit Granting Determinants and Controls (2026)
Amends the credit granting framework, prohibiting banks from extending certain secured or unsecured credit to subsidiaries, distressed debtors, and non-residents without specific approvals.
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Instructions No. 36 of 2020 (Amended 2025) Regarding Early Repayment of Financing (2020)
Mandates that licensed Islamic banks reinstate profits credited to repaid balances and permits early repayment fees for full or partial financing settlements under the Responsible Lending framework.
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Licensing & registration

Banking and Specialized Lending Institutions
All banks and specialized lending institutions must be licensed by the PMA. The PMA issues specific instructions for specialized lending institutions regarding credit portfolios, provisioning, and customer rights.
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Restrictions & warnings

Banks are prohibited from deducting more than 25% of public sector employees' salaries for loan installments, and must not deduct any portion from partial salary transfers (e.g., 50% or 60% disbursements) without specific regulatory approval.
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Lending institutions must exercise strict prudence against illegal loan brokerage practices, prohibiting third parties from charging unauthorized fees for facilitating financing approvals.
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Islamic financing arrangements, such as Tawarruq, are permitted only if they align with Sharia principles, with specific caps (e.g., 1% of income for delayed payment) and prohibitions on deceptive practices.
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Direction of travel

The regulatory direction emphasizes financial stability through active debt restructuring, deferral of installments for Gaza residents and public sector employees, and the promotion of sustainable finance via dedicated funds and preferential risk weights.
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The PMA is continuously updating credit classification systems and provisioning requirements to reflect economic conditions, including the introduction of gender and age-based risk adjustments and enhanced data accuracy in credit information systems.
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Sources

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This guide is compiled automatically from 73 primary-source documents published by Palestine's regulators, reviewed by RegAlert, and refreshed monthly (last updated 2026-07-12). It is not legal advice — always confirm requirements with the regulator or local counsel before acting.