Regulatory Alerts2007-11-09 | 9763Cash Statutory Reserve, Minimum Special Reserve, and Mandatory Placements of Islamic Banks
Bank Al-Maghrib mandates that all Islamic banks operating in Lebanon establish a 25% mandatory cash reserve on weekly average demand liabilities and a 15% minimum special reserve on time-bound investment accounts, while reducing their mandatory foreign currency placements to 11% of specified elements. The decision requires weekly submissions of Forms (-21RO) and (-20RO) to the Statistics and Economic Research Department by the Saturday following Wednesday, with calculations based on official closing rates and specific account codes. Furthermore, it establishes fallback provisions for reserve shortfalls, allows tailored rules for individual banks, and mandates the use of the eSTR electronic transmission system alongside magnetic diskettes containing all referenced data forms.
849 Text/ Section/1 R/113 T/2007-12-31
Basic Circular No. 113 for Banks
We enclose herewith a copy of Basic Decision No. 9763 dated 2007/11/9 concerning the mandatory cash reserve, the minimum special reserve for Islamic banks, and their mandatory placements.
Beirut, on 9 November 2007 Governor of Bank Al-Maghrib (Central Bank of Lebanon) Riad T. Salamé
850
Basic Decision No. 9763
Mandatory Cash Reserve and Minimum Special Reserve for Islamic Banks and Their Mandatory Placements
The Governor of Bank Al-Maghrib, pursuant to the Monetary and Credit Law, particularly Articles 70, 76, 77, 78, and 174 thereof; pursuant to Article 4 of Law No. 575 dated 2004/2/11 concerning the establishment of Islamic banks in Lebanon; pursuant to a decision by the Central Council of Bank Al-Maghrib taken at its meeting held on 2007/11/7,
hereby decides the following:
First: Mandatory Cash Reserve on Islamic Banks' Liabilities in Lebanese Lira:
Article 1: Islamic banks operating in Lebanon shall establish a mandatory cash reserve with Bank Al-Maghrib on the total liabilities in Lebanese Lira specified according to Form No. (-21RO) attached, as follows: (a) 25% of the weekly average of total demand liabilities. (b) 15% of the weekly average of total time liabilities.
Article 2: Islamic banks operating in Lebanon are required to provide the Statistics and Economic Research Department at Bank Al-Maghrib, weekly, with a statement of the average liabilities in Lebanese Lira subject to the mandatory reserve for the week extending from Thursday to Wednesday inclusive, according to Form No. (-21RO) referred to in Article 1 above, within a maximum deadline not exceeding the Saturday following Wednesday, which marks the end of the period on which the calculation is based.
851 Text/ Section/1 R/113 T/2025-12-31 Second: Minimum Special Reserve on Investment Accounts in Lebanese Lira held at Islamic banks:
Article 3: All Islamic banks operating in Lebanon shall establish a minimum special cash reserve with Bank Al-Maghrib at 15% of the weekly average of total time-bound investment accounts.
Article 4: Islamic banks are required to provide the Statistics and Economic Research Department at Bank Al-Maghrib, weekly, with a statement of the weekly average of total time-bound investment accounts according to Form No. (-21RO) attached to this decision, within a maximum deadline not exceeding the Saturday following Wednesday, which marks the end of the period on which the calculation is based.
Third: Mandatory Placements of Islamic Banks in Foreign Currency with Bank Al-Maghrib:
1 Article 5: All Islamic banks operating in Lebanon shall deposit with Bank Al-Maghrib, a rate of 11% instead of 14%, for the elements in foreign currencies specified in Form No. (-20RO) attached. The difference resulting from this reduction shall be used exclusively by Bank Al-Maghrib to secure the required liquidity, in accordance with Basic Decision No. 13335 dated 2021/6/8 (Basic Circular No. 158) and Basic Decision No. 13611 dated 2024/2/2 (Basic Circular No. 166).
Article 6: Islamic banks are required to provide the Statistics and Economic Research Department at Bank Al-Maghrib, weekly, with Form No. (-20RO) referred to in Article 5 above, within a maximum deadline not exceeding the Saturday following Wednesday, which marks the end of the period on which the calculation is based.
1- This article was amended by Interim Decision No. 13713 dated 2025/3/27 (Interim Circular No. 732).
852 Article 7: The weekly average of the elements referred to in Article 5 above shall be calculated based on Bank Al-Maghrib's official closing rate as of Wednesday, which marks the end of the period on which the calculation is based, for each of the seven main foreign currencies specified in Form No. (-20RO) referred to in Article 5 above.
1 Article 8: The rate of 11% referred to in Article 5 above shall be deposited in any of the seven main foreign currencies specified in Table No. (-20RO) referred to in Article 5 above.
Fourth: Various Provisions:
Article 9: The rates specified in this decision shall be calculated according to the same deadlines and method for calculating the mandatory cash reserve in Lebanese Lira, as specified in Article 4 of Basic Decision No. 7835 dated 2001/6/2.
Article 10: If the actual reserve falls below the mandatory reserve, Islamic banks shall be subject to the provisions of Article 6 of Basic Decision No. 7835 dated 2001/6/2.
Article 11: If mandatory placements fall below the rates specified in Articles 3 and 5 above, Islamic banks shall be subject to the provisions of Articles 3 and 4 of Basic Decision No. 7926 dated 2001/9/20.
Article 12: Bank Al-Maghrib may apply rules different from those stipulated in this decision to any Islamic bank, if its situation warrants special measures.
1- This rate became 11% instead of 14% pursuant to Interim Decision No. 13713 dated 2025/3/27 (Interim Circular No. 732).
853 Text/ Section/1 R/113 T/2025-12-31 Article 13: All Islamic banks shall obtain from the Banks Department at Bank Al-Maghrib a magnetic disk (Diskette) containing all data forms and tables referred to in this decision. Forms (-20RO) and (-21RO) referred to above shall be submitted via the 1 Electronic Statistical Reports Transmission Project (eSTR).
Article 14: In addition to the provisions of this decision, Islamic banks shall be subject, in all matters not otherwise stipulated, to all provisions, regulations, and principles applicable to non-Islamic banks.
Article 15: This decision shall take effect as of Thursday, dated 2008/1/3.
Article 16: This decision shall be published in the Official Gazette.
Beirut, on 9 November 2007 Governor of Bank Al-Maghrib (Central Bank of Lebanon) Riad T. Salamé
1- This paragraph was added pursuant to Article 1 of Interim Decision No. 10117 dated 2009/4/14 (Interim Circular No. 182).
854 Liabilities in Foreign Currencies for Islamic Banks Subject to Decision No. 9763 _____ Account No.:__________ Name of Islamic Bank: ___________ Weekly Average Ending in //____ 1 Form -20RO Valued in Thousands of US Dollars
| Currencies | Total |
|---|---|
| Others | Yen |
| Australian Dollar | Japanese Yen |
| Swiss Franc | Canadian Dollar |
| Pound Sterling | Euro |
| US Dollar |
Account No. in Islamic Banks Status (Form - 3010) 201000 Issuing Institutions - Unrated 202000 Banks - Unrated / Financial Institutions - Rated and Unrated (1) x20200 Less: New accounts subject to Basic Circular 150 203000 Branches Abroad x20300 Less: New accounts subject to Basic Circular 150 204000 Parent Institution and Affiliated/Related Companies (Rated & Unrated) excluding Rated Banks x20400 Less: New accounts subject to Basic Circular 150 205000 Public Sector Accounts x20500 Less: New accounts subject to Basic Circular 150 206000 Investment Accounts - Customers (Rated & Unrated) x20600 Less: New accounts subject to Basic Circular 150 s20600 Less: Special accounts subject to Basic Circular 154 y20600 Less: Cash/To-Cash accounts subject to Basic Circular 157 g20600 Less: Branch Special accounts subject to Basic Circular 158 r20600 Less: Branch Special accounts subject to Basic Circular 166 207000 Creditors' Partners Accounts (Rated & Unrated) x20700 Less: New accounts subject to Basic Circular 150 s20700 Less: Special accounts subject to Basic Circular 154 y20700 Less: Cash/To-Cash accounts subject to Basic Circular 157 g20700 Less: Branch Special accounts subject to Basic Circular 158 r20700 Less: Branch Special accounts subject to Basic Circular 166 207900 - Less: Accounts covering bad debt losses (2) 209000 Issued Sukuk - Rated & Unrated 209800 - Less: Current non-accruing liabilities 211000 Creditors' Liabilities (Rated & Unrated) 212110 Various Creditors, Private Sector (Rated & Unrated) x21211 Less: New accounts subject to Basic Circular 150 212300 Values for Payment - Rated & Unrated x21230 Less: New accounts subject to Basic Circular 150 299999 Total Liabilities Valued in Thousands of US Dollars
Investment Accounts in Foreign Currencies Subject to Minimum Reserve at Islamic Banks 322000 Liabilities of Investment Accounts 999999 Total Liabilities and Investment Accounts Valued in Thousands of US Dollars
(1) This amount represents a portion of the figure found under item 202000 Banks and Financial Institutions in Form 3010. Name of Responsible Person:________________________ Signature:_________________ Fax Number: ______________________________________
1- This form was last amended pursuant to Article 2 of Interim Decision No. 13633 dated 2024/5/20 (Interim Circular No. 694), effective from the period spanning Thursday 2024/6/6 to Wednesday 2024/6/12.
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Liabilities of Islamic Banks in Lebanese Lira Subject to Basic Decision No. ____ Name of Islamic Bank: ____ Account No.: _________ 1 Form -21RO Weekly Average Ending in //____
Liabilities of Islamic Banks in Lebanese Lira Subject to Mandatory Cash Reserve In Thousands of Lebanese Liras
| Account No. in Banks Status (Form 3010) | Demand Liabilities | Time Liabilities | Total |
|---|---|---|---|
| Issuing Institutions - Unrated | 201000 | 202000 | |
| Banks - Unrated / Medium & Long-Term Lending Banks (Rated & Unrated) / Financial Institutions (Rated & Unrated) (1) | 203000 | 204000 | |
| Branches Abroad | 205000 | 206000 | |
| Parent Institution and Affiliated/Related Companies (Rated & Unrated) excluding Rated Banks | 20600y | ||
| Public Sector Accounts | 207000 | ||
| Investment Accounts - Customers (Rated & Unrated) | 207900 | ||
| Less: Cash/To-Cash accounts subject to Basic Circular 157 | p20600 | ||
| Less: Cash/To-Cash accounts (Public Sector Salary Receivables) | 209000 | ||
| Creditors' Partners Accounts (Rated & Unrated) | 211000 | ||
| Issued Sukuk - Rated & Unrated | 212110 | ||
| Less: Accounts covering bad debt losses (2) | 212300 | ||
| Various Creditors, Private Sector (Rated & Unrated) | 299999 | ||
| Values for Payment - Rated & Unrated | 322000 | ||
| Total Liabilities in Thousands of Lebanese Liras | 999999 |
Investment Accounts in Lebanese Lira at Islamic Banks Subject to Minimum Special Reserve Liabilities of Investment Accounts | 322000 Total Liabilities and Investment Accounts in Thousands of Lebanese Liras | 999999
(1) This amount represents a portion of the figure found under item 202000 Banks and Financial Institutions in Form 3010. (2) Account No. 207900 is deducted from Time Liabilities.
Name of Responsible Person:________________________ Signature:_________________ Fax Number:______________________________
1- This form was amended pursuant to Article 4 of Interim Decision No. 13556 dated 2023/6/19 (Interim Circular No. 670), effective from the period spanning Thursday, June 15, 2023 to Wednesday, June 21, 2023.