The Bank of Israel set out principles for an additional voluntary program it wants the banking system to adopt, under which banks would allocate NIS 1.5 billion a year across the system to finance relief measures for retail customers during 2025 and 2026. The proposal follows earlier war-related actions and a banking program supporting groups particularly burdened by the Swords of Iron War, which has been extended and updated over time. Under the proposed framework, the program period could be updated in certain cases, including significant changes in geopolitical uncertainty, banking system profitability, or market conditions. Each bank’s share of the NIS 1.5 billion annual amount would be based on its market share as of the program’s publication date, and banks would determine how much to allocate across categories such as paying interest or benefits on positive balances and improving rates on short-term deposits, reducing overdraft interest, automatically sweeping funds above a predefined minimum balance into yield-bearing accounts, and providing fee exemptions or significant discounts to specific population groups. Banks would be required to disclose the actual relief provided in their financial reports using a format to be issued by the Banking Supervision Department, with reports audited by the Banking Supervision Department. The Bank of Israel said adoption of a program consistent with these principles would remove the need for specific taxation processes for the banking system and for legislative processes aimed at promoting sweeps from current accounts to yield-bearing accounts or improving transmission of the Bank of Israel interest rate to interest-bearing deposits. Separately, it reiterated ongoing work to enhance competition in the financial system by removing barriers and advancing infrastructure and public information measures.

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