Central Bank of Lebanon Circular No. 515 Amending Decision No. 6116 on Facilities for Banks and Financial Institutions

Circular No. 515

For Banks and Financial Institutions

We send you a copy of Interim Decision No. 12991 dated 30/1/2019 regarding the amendment of Basic Decision No. 6116 dated 7/3/1996 (Facilities that may be granted by the Central Bank of Lebanon to Banks and Financial Institutions) attached to Basic Circular No. 23.

Beirut, on January 30, 2019

Governor of the Central Bank of Lebanon

Riad T. Safadi

Interim Decision No. 12991

Amending Basic Decision No. 6116 dated 7/3/1996 Regarding the Facilities that may be granted by the Central Bank of Lebanon to Banks and Financial Institutions

The Governor of the Central Bank of Lebanon, Based on the Monetary and Banking Law, particularly Articles 174, 70, 79, and 99 thereof, And based on Basic Decision No. 6116 dated 7/3/1996 and its amendments regarding the Facilities that may be granted by the Central Bank of Lebanon to Banks and Financial Institutions, And based on the Decision of the Central Council of the Central Bank of Lebanon taken in its meeting held on 23/1/2019,

Has decided as follows:

Article 1: The text of Item 3 of Paragraph "First" of Article 11 bis of Basic Decision No. 6116 dated 7/3/1996 is repealed and replaced with the following text:

• "Educational loans granted in Lebanese Lira from all banks amounting to 53 billion Lebanese Lira."

Article 2: The text of Items 2, 6, 7, 17, 18, 22, 27, and 28 of Paragraph "Second" of Article 11 bis of Basic Decision No. 6116 dated 7/3/1996 is repealed and each is replaced with the following new text: "2 - Loans granted in US Dollars to finance environmentally friendly projects in the 'Sixth' sector of Energy, according to the conditions defined in Basic Decision No. 7835 dated 2/6/2001, and which benefit from the State's subsidy on interest, provided that the value of each exceeds 20,000 USD. And that the value of a single loan does not exceed 10,000,000 USD. 6 - Non-residential loans granted in US Dollars according to the conditions stipulated in Paragraph 'First' of Article 10 bis of Basic Decision No. 7835 dated 2/6/2001, provided that the value of a single loan does not exceed 10,000,000 USD. 7 - Residential loans granted in Lebanese Lira according to the conditions stipulated in Paragraph 'First' of Article 10 bis of Basic Decision No. 7835 dated 2/6/2001, provided that the value of the loan does not exceed 450,000,000 LL per residential unit intended to be owned.

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17 - Loans granted in US Dollars to finance environmentally friendly projects for pollution reduction, according to the conditions defined in Paragraph 'Sixth' of Basic Decision No. 7835 dated 2/6/2001, and which benefit from the State's subsidy on interest, provided that the loan term does not exceed ten years and that the value of a single loan does not exceed 10,000,000 USD. 18 - Loans granted in US Dollars to finance the environmental part of environmentally friendly projects outside the energy sector, and which benefit from the State's subsidy on interest, provided that the value of a single loan does not exceed 10,000,000 USD. 22 - Loans granted in US Dollars to support villages and rural areas to finance environmentally friendly projects in the energy and renewable energy sectors, which benefit from the State's subsidy on interest, and which exceed the value of each 20,000 USD. Provided that the value of a single loan does not exceed 10,000,000 USD. 27 - Residential loans granted in Lebanese Lira to employees of the Financial Markets Authority, provided that the value of the loan does not exceed 450,000,000 LL. 28 - Residential loans granted in Lebanese Lira to employees of the Supervisory Committee of Guarantee Bodies, provided that the value of the loan does not exceed 450,000,000 LL.

Article 3: The text of Paragraph (b) of Item 29 of Paragraph "Second" of Article 11 bis of Basic Decision No. 6116 dated 7/3/1996 is repealed and replaced with the following text: "b - The residential loan granted to the Lebanese expatriate must not exceed 600,000 USD for the purchase of the residential unit, and the borrower must not obtain any other banking facility to cover the value of this residential unit. However, the loan value may be increased, once, specifically for the residential unit under construction, within the maximum limit mentioned above."

Article 4: The following text is added to Paragraph "Second" of Article 11 bis of Basic Decision No. 6116 dated 7/3/1996 as Item 34: "34 - Loans granted by banks in US Dollars to financial institutions to finance 'Micro-loans' that will be granted directly by these institutions in US Dollars."

Article 5: The text of Paragraph "Third" of Article 11 bis of Basic Decision No. 6116 dated 7/3/1996 is repealed and replaced with the following text: "Third: To benefit from the provisions of this Article, the loans must meet the following conditions: 1 - They must be granted to finance new projects or expand existing projects, and not granted to finance existing projects or to purchase shares or participations or to repay previous loans. 2 - They must not be granted to finance projects related to obligations contracted with the Lebanese State, municipalities, or public institutions (such as BOT contracts, consensual contracts, and obligations executed based on tenders). 3 - While respecting the conditions defined in the protocols signed with the concerned entities (General Establishment for Housing, Military Housing Device, Ministry of Displaced Persons, Judges' Mutual Aid Fund, General Directorate of Internal Security Forces, General Directorate of Public Security Forces, Customs Police, ...), residential loans must be granted to purchase or build a residence in Lebanon, once, and this residence must be the main residence of the Lebanese client or the expatriate. 4 - The total balance of environmental and energy loans benefiting from support and granted from all banks to a single institution and/or a single economic group according to the definition in the regulatory texts issued by the Central Bank of Lebanon must not exceed 20,000,000 USD. 5 - Otherwise, the interest and commissions calculated annually on these loans must not exceed the percentages specified in the attached Table (BDL-PB). 6 - These loans must be repaid in installments due at the end of each month or each quarter as specified in the contract signed between the concerned bank and its client."

Article 6: The text of Paragraph (a) of Item 2 of Paragraph "Fourth" of Article 11 bis of Basic Decision No. 6116 dated 7/3/1996 is repealed and replaced with the following text: "-a - The loans specified in Items (7) to (15) and in Items (19) and (20) implicitly and (21) and (23) and (25) and (26) and (27) and (28) and (32) and (33) and (34)."

Article 7: The following text is added to Article 11 bis of Basic Decision No. 6116 dated 7/3/1996 as Paragraph Fifteen: "Fifteen: Banks may benefit from Central Bank of Lebanon support for the loans specified in Paragraph "Second" of this Article and granted to their clients, at their own responsibility before 31/12/2019, according to the conditions and procedures specified in this Article, provided that the total of: 1 - Residential loans granted in Lebanese Lira from all banks amounting to 790 billion Lebanese Lira, divided as follows: a - An amount of 490 billion Lebanese Lira regarding residential loans according to the provisions of "Paragraph Thirteen" of this Article and defined in the final regulations reported by the Central Bank of Lebanon, which possess the following characteristics collectively:

• Obtaining the approval of the concerned bank or approvals from the concerned entities in the protocols (General Establishment for Housing, Military Housing Device, ...)
• The bank exceeding the amount allocated to it for the year 2018.
• From the start of the support's application on these loans as of the year 2019. b - An amount of 300 billion Lebanese Lira regarding residential loans granted during the year 2019, provided that each bank grants these loans from the amounts deposited in its name in Lebanese Lira in a special credit account at the Central Bank of Lebanon resulting from US Dollar sales operations conducted with the Central Bank of Lebanon for this purpose. Residential loans granted according to this mechanism are included in calculating the 25% rate specified in Article 1 bis of Basic Decision No. 7776 dated 21/2/2001. 2 - Loans granted in Lebanese Lira from all banks to productive sectors under the "Guarantee of Small Institutions" programs amounting to 5 billion Lebanese Lira. 3 - Educational loans granted in Lebanese Lira from all banks amounting to 45 billion Lebanese Lira. 4 - "Micro-loans" financed from all banks in Lebanese Lira amounting to 25 billion Lebanese Lira. 5 - Other loans granted in US Dollars from all banks amounting to 500 million US Dollars, including those financed by the World Bank and the (EIB) and (AFD)."

Article 8: The text of Article 12 of Basic Decision No. 6116 dated 7/3/1996 is repealed and replaced with the following text: "While respecting the conditions defined in the protocols signed with the concerned entities (General Establishment for Housing, Military Housing Device, Ministry of Displaced Persons, Judges' Mutual Aid Fund, General Directorate of Internal Security Forces, General Directorate of Public Security Forces, Customs Police, ...): 1 - The sale of the residential unit subject to the provisions of residential loans granted according to this Decision is prohibited before seven years have passed since the implementation of the loan. 2 - All residential loans subject to this Decision cannot be repaid before seven years have passed since their implementation in special or exceptional cases justified, where the assessment lies with the Governor of the Central Bank of Lebanon, such as a change in the classification of the loan to a doubtful or bad loan due to obtaining it, or death, or cessation of the client's income, or external reasons beyond his will or delay or non-use of the residential unit under construction or impossibility of registering it. 3 - The residential unit cannot be replaced except in special or exceptional cases justified, where the assessment lies with the Governor of the Central Bank of Lebanon, such as delay or non-use of the residential unit under construction or impossibility of registering it, and this only once. 4 - In the event of selling the residential unit subject to the loan granted to the client or repaying this loan before seven years have passed since its implementation, in accordance with the provisions of this Article, the lending bank pays a penalty interest of 2% of the value of the residential loan granted to the client for the period during which the bank benefited from the facilities granted to it by the Central Bank of Lebanon for this loan, and this amount is credited to the client. 5 - Insurance policy costs are not included in the residential loans benefiting from the provisions of this Decision."

Article 9: The text of Article 12 bis of Basic Decision No. 6116 dated 7/3/1996 is repealed and replaced with the following text. "Loans subject to 'Article 9 bis', 'Article 10', and 'Article 11 bis' of this Decision can be restructured if they are converted from Lebanese Lira to US Dollars for this purpose."

Article 10: The text of all forms (IN), (-18IN), and (BDL-PB) attached to Basic Decision No. 6116 dated 7/3/1996 is repealed and replaced with the new text attached to this Decision.

Article 11: This Decision takes effect immediately upon its issuance.

Article 12: This Decision is published in the Official Gazette.

Beirut, on January 30, 2019

Governor of the Central Bank of Lebanon

Riad T. Safadi

Central Bank of Lebanon – Financing Unit Statement of Decision No. 6116 dated 7/3/1996 Basic Circular No. 23 Table No. BDL - PB

Serial No.	Loan Category Code	Loan Type	Maximum Interest and Commission on Loan	Maximum Support Granted by Central Bank of Lebanon
9	HIN9	Residential loans in Lebanese Lira granted according to the conditions stipulated in Paragraph "First" of Article 10 bis of Basic Decision No. 7835 dated 2/6/2001.	n27k: BDL deposit rate index minus 3.56%, provided it is less than 5.94%	The difference between the interest and commission on the loan and the BDL deposit rate index + 1%, provided it exceeds 4.56%
10	HEPH	Residential loans in Lebanese Lira granted based on the protocol signed with the General Establishment for Housing.	k07p: BDL deposit rate index minus 4%, provided it is less than 5.5%	The difference between the interest and commission on the loan and the BDL deposit rate index + 1%, provided it exceeds 5%
11	HMLT	Residential loans in Lebanese Lira granted based on the protocol signed between banks and the Military Housing Device for Volunteers.	m1k: BDL deposit rate index minus 4%, provided it is less than 5.5%	The difference between the interest and commission on the loan and the BDL deposit rate index + 1%, provided it exceeds 5%
12	HJUR	Residential loans in Lebanese Lira granted based on the cooperation protocol signed between banks and the Judges' Mutual Aid Fund.	jrk: BDL deposit rate index minus 4%, provided it is less than 5.5%	The difference between the interest and commission on the loan and the BDL deposit rate index + 1%, provided it exceeds 5%
13	HDPL	Residential loans in Lebanese Lira granted to displaced persons based on the cooperation protocol signed between banks and the Ministry of Displaced Persons.	dpk: BDL deposit rate index minus 4%, provided it is less than 5.5%	The difference between the interest and commission on the loan and the BDL deposit rate index + 1%, provided it exceeds 5%
14	HFSI	Residential loans in Lebanese Lira granted based on the cooperation protocol signed between banks and the General Directorate of Internal Security Forces.	fsk: BDL deposit rate index minus 4%, provided it is less than 5.5%	The difference between the interest and commission on the loan and the BDL deposit rate index + 1%, provided it exceeds 5%
15	HDSG	Residential loans in Lebanese Lira granted based on the cooperation protocol signed between banks and the General Directorate of Public Security Forces.	sgk: BDL deposit rate index minus 4%, provided it is less than 5.5%	The difference between the interest and commission on the loan and the BDL deposit rate index + 1%, provided it exceeds 5%
16	EDUS	Loans in Lebanese Lira granted to higher education institutions to pursue studies.	uk: BDL deposit rate index minus 4.5%, provided it is less than 5.5%	The difference between the interest and commission on the loan and the BDL deposit rate index + 1%, provided it exceeds 5.5%
20	HABT	Residential loans in Lebanese Lira granted from Housing S.A.L. and financed by banks.	ik: BDL deposit rate index minus 4.75%, provided it is less than 3.75%	The difference between the interest and commission on the loan granted to Housing S.A.L. and the BDL deposit rate index + 1%, provided it exceeds 5.75%
21	MICR	Loans granted by banks in Lebanese Lira to financial institutions to finance "Micro-loans".	k22h: BDL deposit rate index minus 4%, provided it is less than 5.5%	The difference between the interest and commission on the loan and the BDL deposit rate index + 1%, provided it exceeds 5%
26	GSSE	Loans granted in Lebanese Lira to productive sectors within the "Guarantee of Small Institutions" program.	t: BDL deposit rate index minus 3.5%, provided it is less than 7%	The difference between the interest and commission on the loan and the BDL deposit rate index + 1%, provided it exceeds 3.5%

Serial No.	Loan Category Code	Loan Type	Maximum Interest and Commission on Loan	Maximum Support Granted by Central Bank of Lebanon
28	HDSE	Residential loans granted in Lebanese Lira based on the cooperation protocol signed between banks and the State Police.	sek: BDL deposit rate index minus 4%, provided it is less than 5.5%	The difference between the interest and commission on the loan and the BDL deposit rate index + 1%, provided it exceeds 5%
29	HADD	Residential loans granted in Lebanese Lira based on the cooperation protocol signed between banks and the Customs Police.	adk: BDL deposit rate index minus 4%, provided it is less than 5.5%	The difference between the interest and commission on the loan and the BDL deposit rate index + 1%, provided it exceeds 5%
33	HPMP	Residential loans granted in Lebanese Lira based on the cooperation protocol between banks and the Fire Brigade.	ppk: BDL deposit rate index minus 4%, provided it is less than 5.5%	The difference between the interest and commission on the loan and the BDL deposit rate index + 1%, provided it exceeds 5.5%
34	HGMB	Residential loans granted in Lebanese Lira based on the cooperation protocol between banks and the Beirut Municipality Guard Brigade.	gbk: BDL deposit rate index minus 4%, provided it is less than 5.5%	The difference between the interest and commission on the loan and the BDL deposit rate index + 1%, provided it exceeds 5%
36	INFED	Loans in US Dollars to finance environmentally friendly projects in the energy sector financed by the (EIB) and (AFD), which do not benefit from the State's subsidy on interest.	ev2d: (EIB) and (AFD) interest minus 2.25%	The difference between the interest and commission on the loan and the (EIB) and (AFD) margin + 0.5% Central Bank commission + 3%
37	WBEVD	Loans in US Dollars to finance environmentally friendly projects to reduce pollution financed by the World Bank, which benefit from the State's subsidy on interest.	ev1d, ev2d: World Bank interest minus 2.5%	The difference between the interest and commission on the loan and the World Bank margin + 0.5% Central Bank commission + 2.5%
38	RDEVD	Loans in US Dollars for R&D purposes in productive sectors.	rdd: LIBOR rate for one year plus 0.23%	5.5%
39	ENVED	Loans in US Dollars to finance environmentally friendly projects in the energy sector, which benefit from the State's subsidy on interest, and which exceed the value of each 20,000 USD. Provided that the value of a single loan does not exceed 10,000,000 USD.	d2ev: LIBOR rate for one year minus 0.52%	6.25%
41	IN09D	Non-residential loans granted in US Dollars according to the conditions stipulated in Paragraph "First" of Article 10 bis of Basic Decision No. 7835 dated 2/6/2001.	n09d, n19d: LIBOR rate for one year plus 4.13%	1.6%
43	EDUSD	Loans in US Dollars granted to higher education institutions to pursue studies.	ud: LIBOR rate for one year plus 1.23%, provided it is less than 4.5%	4%
44	EVESD	Loans in US Dollars, the value of each exceeding 20,000 USD, which benefit from the State's subsidy on interest to finance environmentally friendly projects in the energy sector.	d2ev: LIBOR rate for one year minus 0.52%	6.25%
46	ENTPD	Loans in US Dollars granted to entrepreneurs and innovators to establish new projects in the field of knowledge and creativity.	cind: LIBOR rate for one year plus 0.23%	5.5%
47	ENVPD	Loans to finance environmentally friendly projects to reduce pollution granted in US Dollars, which benefit from the State's subsidy on interest.	ev1d, ev2d: LIBOR rate for one year minus 0.77%	6.5%
48	EVNED	Loans granted in US Dollars to finance the environmental part of environmentally friendly projects outside the energy sector, which benefit from the State's subsidy on interest, provided that the value of a single loan does not exceed 10,000,000 USD.	d1ev: LIBOR rate for one year minus 0.52%	6.25%

Serial No.	Loan Category Code	Loan Type	Maximum Interest and Commission on Loan	Maximum Support Granted by Central Bank of Lebanon
53	EVRED	Loans granted in US Dollars to support villages and rural areas to finance environmentally friendly projects in the energy and renewable energy sectors, which benefit from the State's subsidy on interest, and which exceed the value of each 20,000 USD.	d2ev: LIBOR rate for one year plus 0.23%	5.5%
54	EVRND	Loans granted in US Dollars to support villages and rural areas to finance environmentally friendly projects in the energy and renewable energy sectors, which benefit from the State's subsidy on interest, and which exceed the value of each 20,000 USD.	d2ev: LIBOR rate for one year plus 0.23%	5.5%
55	PLEAD	Loans granted in US Dollars to finance the production of Lebanese artistic works (cinematic or television films, novels or documentaries or educational, or theatrical works).	ead: LIBOR rate for one year plus 4.13%	1.6%
56	HCMA	Residential loans granted in Lebanese Lira to employees of the Financial Markets Authority.	cmak: BDL deposit rate index minus 4%, provided it is less than 5.5%	The difference between the interest and commission on the loan and the BDL deposit rate index + 1%, provided it exceeds 5%
57	HCCA	Residential loans granted in Lebanese Lira to employees of the Supervisory Committee of Guarantee Bodies.	ccak: BDL deposit rate index minus 4%, provided it is less than 5.5%	The difference between the interest and commission on the loan and the BDL deposit rate index + 1%, provided it exceeds 5%
58	HEMG	Residential loans granted in US Dollars to expatriates.	emh: LIBOR rate for one year plus 1.23%	4%
59	PEMG	Non-residential loans granted in US Dollars to expatriates.	emp: LIBOR rate for one year plus 1.23%	3.5%
60	PPKG	Loans granted in US Dollars to build a parking garage for the general public with the aim of renting parking spaces.	pkgd: LIBOR rate for one year plus 4.13%	1.6%
61	WCEX	Loans granted in foreign currency to institutions for working capital financing against exports.	ced: LIBOR rate for one year plus 2.13%	2.6%
63	MICRD	Loans granted by banks in US Dollars to financial institutions to finance "Micro-loans".	d22h: LIBOR rate for one year plus 2.13%	3.6%
64	HIN9X	Residential loans granted according to the conditions stipulated in Paragraph "First" of Article 10 bis of Basic Decision No. 7835 dated 2/6/2001 and converted to US Dollars.	x27k: BDL deposit rate index minus 4%, provided it is less than 5.5%	The difference between the interest and commission on the loan and the BDL deposit rate index + 1%, provided it exceeds 5%

Notes:

• To obtain the "BDL deposit rate index", one can contact the Financing Unit at the Central Bank of Lebanon.
• The BDL deposit rate index in Lebanese Lira is used for loans granted in Lebanese Lira.
• Any increase in the "BDL deposit rate index" does not lead to an increase in the support rate paid by the Central Bank of Lebanon, but reflects directly as an increase in the interest rate percentage borne by the client.
• Any decrease in the "BDL deposit rate index" reflects as a decrease in the support rate paid by the Central Bank of Lebanon.

Central Bank of Lebanon – Financing Unit Statement of Decision No. 6116 dated 7/3/1996 Basic Circular No. 23 Table No. IN

Serial No.	Loan Category Code	Loan Type	Interest and Commission Rate
1	PRDB	Loans to productive sectors benefiting from the State's subsidy on interest, except those granted in Lebanese Lira, guaranteed by Kafalat S.A.L.	k3a: 2-year Lebanese Treasury bond yield + 1.075%
		- Those granted in foreign currency	k3a: LIBOR rate for three months + 7.075%
		- Those converted to US Dollars	k3xa:
2	RDEV	Loans in Lebanese Lira for R&D purposes in productive sectors.	rdk: 0.75%
3	ENVE	Loans in Lebanese Lira to finance environmentally friendly projects in the energy sector, which benefit from the State's subsidy on interest, and which exceed the value of each 30 million Lebanese Lira.	k2ev: 50% of 1-year Treasury bond yield + 3.75%
4	ENVB	Loans in Lebanese Lira to finance environmentally friendly projects benefiting from the State's subsidy on interest, and which exceed the value of each 30 million Lebanese Lira.	k35a: 2-year Treasury bond yield + 0.75%
5	INFE	Loans to finance environmentally friendly projects in the energy sector financed by the (EIB) and (AFD), which benefit from the State's subsidy on interest.	d2ev: (EIB) and (AFD) margin + 0.5% Central Bank commission + 3.75% Bank margin minus (150 basis points 1-year Treasury bond interest)

Central Bank of Lebanon – Financing Unit Statement of Decision No. 6116 dated 7/3/1996 Basic Circular No. 23 Table No. IN

Serial No.	Loan Category Code	Loan Type	Interest and Commission Rate
6	WBEV	Loans to finance environmentally friendly projects to reduce pollution financed by the World Bank, which benefit from the State's subsidy on interest.	d2ev - d1ev: World Bank margin + 0.5% Central Bank commission + 3%
7	IN09	Non-residential loans granted in Lebanese Lira according to the conditions stipulated in Paragraph "First" of Article 10 bis of Basic Decision No. 7835 dated 2/6/2001.	n09k, n19k: 40% of 1-year Lebanese Treasury bond yield + 3.3%
8	KAFB	Loans to productive sectors in Lebanese Lira guaranteed by Kafalat S.A.L., benefiting from the State's subsidy on interest.	k2q: 40% of 1-year Lebanese Treasury bond yield + 3.3%
9	HIN9	Residential loans in Lebanese Lira granted according to the conditions stipulated in Paragraph "First" of Article 10 bis of Basic Decision No. 7835 dated 2/6/2001.	k29n: 40% of 1-year Lebanese Treasury bond yield + 3.3% (Granted before 8/2/2017)
			k27n: 25% of 1-year Lebanese Treasury bond yield + 2.9% (Granted after 7/2/2017)
10	HEPH	Residential loans in Lebanese Lira granted based on the protocol signed with the General Establishment for Housing.	pk: 20% of 2-year Lebanese Treasury bond yield + 3.9% (Granted before 8/2/2017)
			k07p: 10% of 1-year Lebanese Treasury bond yield + 3.2% (Granted after 7/2/2017)

Central Bank of Lebanon – Financing Unit Statement of Decision No. 6116 dated 7/3/1996 Basic Circular No. 23 Table No. IN

Serial No.	Loan Category Code	Loan Type	Interest and Commission Rate