Jordanian Banking Regulations See Major Overhaul

The Jordanian government has drafted significant amendments to the country’s banking law aimed at enhancing oversight and stability in the financial sector.

Key Changes

• The Central Bank will have increased authority over bank management, including:
  • Determining the number of board members and independent directors
  • Ensuring that board members meet strict criteria, including independence from the bank and its shareholders
• General managers of banks must not be related to the chairman or other high-ranking officials
• The Central Bank has the right to object to appointments that do not meet these criteria

Procedures for Handling Financial Crises

The amendment outlines procedures for handling financial crises, including:

• Merging or selling struggling banks
• Establishing bridge banks
• Liquidating assets
• Taking measures in coordination with Jordan Deposit Insurance Corporation (JDIC)

Greater Powers for the Central Bank

The draft also grants the Central Bank greater powers to intervene in bank management, including:

• Substituting the board of directors and ordinary and extraordinary general assemblies

Impact on the Financial Market

Industry experts believe that the amendments will have a positive impact on the financial market, increasing consumer protection and reducing the number of financial crimes.

“The draft amendment is a positive development that should reflect positively on the financial market, increase consumer protection, and reduce the number of financial crimes,” said an industry expert.

Current Status

The draft amendment is currently under review and has not yet been passed into law. However, it is expected to have significant implications for the Jordanian banking sector if implemented.