Banks Still Not Fully Prepared for Checking Account Reforms

Ram Dagan
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Ram Dagan

The banking system showed a slight improvement in April regarding its preparedness for the reforms affecting checking and loan accounts as of July 1, according to figures published by the Bank of Israel's supervisor of banks yesterday.

TheMarker has learned that Supervisor of Banks Yoav Lehman next month will publish the names of banks that have not taken significant preparatory steps toward implementing the reforms. Lehman upbraided the banks earlier this week for their lack of preparedness, sending letters to each explaining exactly what arrangements are necessary.

Only 87 percent of the 3.2 million accounts that require credit framework arrangements have been made, up slightly from the 86 percent figure recorded in March. Credit frameworks of 58 percent were arranged by mutual consent between the banks and their customers, while 29 percent were arranged unilaterally by the banks. As of January 1, the banks will not be allowed to honor monetary commitments of account holders who exceed their overdraft limit and whose credit agreement is unilateral.

The figures also indicate that the banks are neutering the reforms trying to be implemented by the central bank. At some banks, the number of accounts that have exceeded their overdraft limit is greater than the number of accounts whose credit framework has to be arranged prior to the date the reforms take effect. The supervisor of banks said this means that some of the banks are allowing clients to deviate from the agreed-upon credit frameworks, too. In any case, the scope of the excessive overdrafts is relatively small at this stage.

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