Palestine Monetary Authority Issues Instructions to Mitigate the Effects of COVID-19 Crisis
Ramallah and Al-Bireh Governorate, July 21, 2020
Palestine Monetary Authority has issued new instructions to banks operating in Palestine as part of its ongoing efforts to mitigate the economic effects of the health crisis (COVID-19).
Under the instructions, borrowers who have been directly affected by the current economic situation only, and whose financial ability to pay have been affected, may have options either to have temporary overdraft limit or restructuring of existing credit, or the rescheduling of existing credit. Borrowers from Islamic bank may have temporary securitization limits in accordance with the terms and instructions of Palestine Monetary Authority.
His Excellency the Governor of Palestine Monetary Authority Mr. Azzam Shawa said the new instructions aimed to give borrowers the possibility to postpone the payment of their obligations with multiple options, reduce the cost to the lowest possible level on borrowers, as well as inject additional liquidity into the market estimated at $100 million through banks, which would contribute to the recovery of economic activity. The banks shall identify their individual and corporate debtors whose income or cash flows, businesses and commercial activities have been affected by the current crisis.
The new Palestine Monetary Authority's instructions to the public include:
- Temporary overdraft: The possibility of obtaining a temporary overdraft limit equal to the value of the installments from July 1, 2020 to January 1, 2021, to be used to pay the installments in full or in part. The interest rate on the temporary limit is the value of the contractual interest with 1% is deduction without payment of any fees or commissions.
- Structuring facilities: The possibility of rearranging and structuring existing facilities without any commissions or fees, and with a limit on interest rates or contractual profit.
- Scheduling facilities: The possibility of scheduling existing facilities without any commissions or fees, with borrowers exempted from the down payment.
- Securitization: The possibility of obtaining a temporary securitization limit equal to the value of the installments from July 1, 2020 to January 1, 2021. It is used to pay the installments in full or in part and to be paid in a maximum of 24 months. The interest rate on the temporary limit is the contractual interest rate with a deduction of 1%, without any fees or commissions.
- Structuring Ijara: The possibility of deferring the installments granted in the form of Ijara muntahia bitamleek (lease and ownership) with an increase in the rental period and adjusting the Ijara on the subsequent rental periods that were not used from the leased property, allowing it to be paid early and exempting it from profits for the completed period.
- Continued credit grants: Urge banks to continue to grant credit to new and existing clients to mitigate the effects of the crisis, free up 1% of cash flow and $100 million to help secure money.
- Istidama (Sustainability) program: Emphasizing the need for banks to receive credit applications for the Sustainability Program through all branches, serving the provision of funding for projects affected by COVID-19 crisis and enabling them to restore activity and maintain employment.
- Returned cheque commission: Reduce the value of a returned cheque commission because of insufficient balance to twenty (20) shekels only.