Jordan: Banking Compliance Regulations Tighten to Enhance Transparency and Stability

Government Moves to Strengthen Banking Regulations in Jordan

In an effort to strengthen banking regulations in Jordan, the government has drafted an amendment to the country’s Banking Law No. 28 of 2000, granting the Central Bank more oversight and authority over bank management.

Key Changes in the Draft Amendment

• The Central Bank will have full discretion to determine the number of members on a bank’s Board of Directors and set conditions for independence.
• Independent directors must meet specific requirements, including:
  • Not being related to senior executives or shareholders
  • Meeting certain qualifications and expertise
• Prohibits the general manager of a bank from being related to the chairman of the board or other high-ranking officials.
• Empowers the Central Bank to object to appointments that do not meet certain criteria.

Measures to Maintain Stability

In cases where a bank encounters financial difficulties, the draft amendment allows the Central Bank to take measures to maintain stability, including:

• Merging with another bank
• Selling assets
• Establishing a “bridge” bank (with the help of the Jordan Deposit Insurance Corporation (JDIC))

Aims and Potential Impact

The proposed changes aim to increase transparency and reduce the risk of financial crises by expanding the Central Bank’s oversight of bank management and providing a framework for dealing with troubled banks. If implemented, the amendments could have a positive impact on the financial market, increase consumer protection, and help reduce the incidence of financial crimes.

Current Status

The draft amendment is currently under review and has not yet been passed into law.