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2019-12-30 | 12992

Central Bank of Lebanon Circular No. 516: Amendment of Basic Decision No. 7835 Regarding Mandatory Reserves

The Central Bank of Lebanon issued Circular No. 516 on January 30, 2019, amending Basic Decision No. 7835 to update the regulatory framework for mandatory reserves. The amendment introduces provisions allowing banks to deduct mandatory reserves for loans reclassified as doubtful or bad debts, permits the rescheduling of loans from Lebanese Lira to US Dollars, and replaces specific reporting forms. These changes aim to refine the calculation of reserve requirements for various loan categories, including those benefiting from 2009 incentives and environmental projects.

Lebanon

Banque du Liban

Circular No. 516

For Banks

We send you a copy of Circular No. 12992 dated 30/1/2019 regarding the amendment of Basic Decision No. 7835 dated 2/6/2001 (Mandatory Reserve) attached to Basic Decision No. 84 dated 2/6/2001.

Beirut, January 30, 2019

Governor of the Central Bank of Lebanon

Riad T. Salam

Central Bank of Lebanon Circular No. 12992

Amendment of Basic Decision No. 7835 dated 2/6/2001 Regarding Mandatory Reserves

The Governor of the Central Bank of Lebanon,

Pursuant to the Monetary and Banking Law, specifically Articles 174, 70, 76, and 79 thereof,

Pursuant to Basic Decision No. 7835 dated 2/6/2001 and its amendments regarding Mandatory Reserves,

Pursuant to the decision of the Central Council of the Central Bank of Lebanon taken at its meeting held on 23/1/2019,

Decides as follows:

Article 1: The text of paragraph (7) of Section "Fourth" of Article 10 bis of Basic Decision No. 7835 dated 2/6/2001 is repealed and replaced with the following text:

"The deduction of mandatory reserves ceases when the loan becomes a doubtful or bad debt according to the regulatory provisions issued by the Central Bank of Lebanon.

It is understood that if a residential loan is reclassified such that it becomes 'doubtful' and 'bad', the concerned bank may be approved again to deduct the mandatory reserve against the aforementioned loan.

If a non-residential loan is reclassified such that it becomes 'doubtful' and 'bad', the concerned bank may be informed of the deduction of liabilities subject to mandatory reserves and the reduction of mandatory reserves against the loan mentioned, according to each case individually."

Article 2: The text of the last paragraph of "Article 25 bis" of Basic Decision No. 7835 dated 2/6/2001 is amended to read as follows:

Section "First" of Article 10 bis and Section "Sixth" of this Decision: "Loans subject to this Decision may be rescheduled if they are converted from Lebanese Lira to US Dollars for this purpose."

Article 3: The text of all models (-011RO), (-25ARO), (-26ARO), (-29ARO), and (-30ARO) attached to Basic Decision No. 7835 dated 2/6/2001 is repealed and replaced with the new text attached to this Decision.

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Article 4: This Decision shall take effect upon its issuance.

Article 5: This Decision shall be published in the Official Gazette.

Beirut, January 30, 2019

Governor of the Central Bank of Lebanon

Riad T. Salam

Statement of Decision No. 7835 dated 2/6/2001 Basic Circular 84 Form No. -25ARO Table attached to the request for deduction from Mandatory Reserves for loans benefiting from 2009 incentives or subject to individual approval (New or Modified Loans as of ___ / ___ / ______ ) Bank Name: Responsible Person: Bank Number: Phone Number: Borrower Name: Risk Center Number*: Economic Sector Code: Loan Value: Loan Currency Code: Lebanese Lira Balance Used: Date of Use: Maturity Date: Loan Type Code**: Loan Usage Area Code: Program for the development of the loan principal balance according to maturity date Date (Day/Month/Year) Loan Principal Balance (In Loan Currency) Date (Day/Month/Year) Loan Principal Balance (In Loan Currency) Bank Signature (*) : For individuals and real companies without a Risk Center number, a borrower identification card must be attached along with a copy of the borrower's ID card. (**) : Code "19n" Medium or long-term loans for productive sectors granted in Lebanese Lira benefiting from 2009 incentives. For companies: Company identification card along with a copy of the commercial register for companies without a Risk Center number. Code "19x" Medium or long-term loans for productive sectors benefiting from 2009 incentives converted to US Dollars. Code "1ev" Loans granted in Lebanese Lira to finance environmentally friendly projects in non-energy sectors, not benefiting from interest subsidies. Code "09n" Other loans granted in Lebanese Lira benefiting from 2009 incentives. Code "1xv" Loans granted to finance environmentally friendly projects in non-energy sectors, not benefiting from interest subsidies, converted to US Dollars. Code "09x" Other loans benefiting from 2009 incentives converted to US Dollars. Code "2ev" Loans granted in Lebanese Lira to finance environmentally friendly projects in the energy sector, not benefiting from interest subsidies. Code "2xv" Loans granted to finance environmentally friendly projects in the energy sector, not benefiting from interest subsidies, converted to US Dollars. Code "en" Loans granted in Lebanese Lira to contractors for constructing or rehabilitating government buildings. Code "pkg" Loans granted in Lebanese Lira to build a public parking garage for the purpose of renting parking spaces. Code "ce" Loans granted in Lebanese Lira to industrial institutions to finance working capital against exports.

Central Bank of Lebanon Explanation of Form -25ARO:

Information Explanation Bank Name. Bank name as listed in the Banks List. Bank Number. Bank number as listed in the Banks List. Responsible Person. Name of the direct person in charge of these loans for contact if necessary. Phone Number. Direct phone number of the responsible person. Borrower Name. Name of the debtor client benefiting from the loan. Risk Center Number. For individuals and individual institutions, a borrower identification card (I-CDR) must be attached along with a copy of the ID card of the borrower who does not have a Risk Center number. For companies, a company identification card (S-CDR) must be attached along with a copy of the commercial register for companies that do not have a Risk Center number. Economic Sector Code. Economic sector code based on the loan granted according to Basic Decision No. 7705 dated 26/10/2000. Loan Value. Value of the loan mentioned by the bank in its request. If the loan is for environmentally friendly projects, the loan value must exceed 30 million L.L. Balance Used. If the loan was granted before submitting the request to the Central Bank of Lebanon, state the original used balance from the loan value, excluding interest and commissions, on the date of sending the deduction request. If the loan was granted before sending the request, state the date of use (first time). If not previously granted, state nothing. Maturity Date. State the maturity date of the last installment. Loan Type Code 19n: Medium or long-term loans for productive sectors granted in Lebanese Lira benefiting from 2009 incentives. 19X: Medium or long-term loans for productive sectors benefiting from 2009 incentives converted to US Dollars. 09n: Medium or long-term residential loans granted in Lebanese Lira benefiting from 2009 incentives. 09x: Medium or long-term residential loans benefiting from 2009 incentives converted to US Dollars. 1Ev: Loans granted in Lebanese Lira to finance environmentally friendly projects in non-energy sectors. Benefiting from interest subsidies. 1xv: Loans granted to finance environmentally friendly projects in non-energy sectors. Benefiting from interest subsidies converted to US Dollars. 2ev: Loans granted in Lebanese Lira to finance environmentally friendly projects in the energy sector. Benefiting from interest subsidies. 2xv: Loans granted to finance environmentally friendly projects in the energy sector. Benefiting from interest subsidies converted to US Dollars. en: Loans granted in Lebanese Lira to contractors for constructing or rehabilitating government buildings. pkg: Loans granted in Lebanese Lira to build a public parking garage for the purpose of renting parking spaces. ce: Loans granted in Lebanese Lira to industrial institutions to finance working capital against exports. Loan Usage Area Code. State the area code where the loan will be used according to the attached table 01REG. Loan Principal Balance Development Program. State the dates of changes in the loan principal balance according to withdrawals or repayments. Loan Principal Balance (In Loan Currency). State the loan principal account balance excluding interest and commissions as of the above date.

Central Bank of Lebanon – Risk Center Statement of Decision No. 7835 dated 2/6/2001 Basic Circular 84 Form No. -26ARO Deductions from Mandatory Reserves for loans benefiting from 2009 incentives or subject to individual approval (Status suspended on Wednesday ___ / ___ / ______ ) Bank Name: Responsible Person: Bank Number: Phone Number: Loan Currency: Lebanese Lira Balance Used Loan Number Governor Decision Number Internal Borrower Name Borrower Number Risk Center Number Loan Type Code * Loan Granted Principal without Interest Accrued Interest (*) : Code "19n" Medium or long-term loans for productive sectors granted in Lebanese Lira benefiting from 2009 incentives. Bank Signature Code "19x" Medium or long-term loans for productive sectors benefiting from 2009 incentives converted to US Dollars. Code "1ev" Loans granted in Lebanese Lira to finance environmentally friendly projects in non-energy sectors, not benefiting from interest subsidies. Code "1xv" Loans granted to finance environmentally friendly projects in non-energy sectors, not benefiting from interest subsidies, converted to US Dollars. Code "09n" Other loans granted in Lebanese Lira benefiting from 2009 incentives. Code "09x" Other loans benefiting from 2009 incentives converted to US Dollars. Code "2ev" Loans granted in Lebanese Lira to finance environmentally friendly projects in the energy sector, not benefiting from interest subsidies. Code "2xv" Loans granted to finance environmentally friendly projects in the energy sector, not benefiting from interest subsidies, converted to US Dollars. Code "en" Loans granted in Lebanese Lira to contractors for constructing or rehabilitating government buildings. Code "pkg" Loans granted in Lebanese Lira to build a public parking garage for the purpose of renting parking spaces. Code "ce" Loans granted in Lebanese Lira to industrial institutions to finance working capital against exports.

Central Bank of Lebanon

Explanation of Form -26ARO:

Information Explanation Bank Name. Bank name as listed in the Banks List. Bank Number. Bank number as listed in the Banks List. Responsible Person. Name of the direct person in charge of these loans for contact if necessary. Phone Number. Direct phone number of the responsible person. Internal Loan Number. An automatic number issued and approved by the Central Bank of Lebanon to identify each loan. Governor Decision Number. The number of the Governor's approval for the deduction from mandatory reserves. Borrower Name. Name of the debtor client benefiting from the loan. Risk Center Number. Debtor number at the Risk Center. Loan Type Code. 19n: Medium or long-term loans for productive sectors granted in Lebanese Lira benefiting from 2009 incentives. 19X: Medium or long-term loans for productive sectors benefiting from 2009 incentives converted to US Dollars. 09n: Medium or long-term residential loans granted in Lebanese Lira benefiting from 2009 incentives. 09x: Medium or long-term residential loans benefiting from 2009 incentives converted to US Dollars. 1Ev: Loans granted in Lebanese Lira to finance environmentally friendly projects in non-energy sectors. Benefiting from interest subsidies. 1xv: Loans granted to finance environmentally friendly projects in non-energy sectors. Benefiting from interest subsidies converted to US Dollars. 2ev: Loans granted in Lebanese Lira to finance environmentally friendly projects in the energy sector. Benefiting from interest subsidies. 2xv: Loans granted to finance environmentally friendly projects in the energy sector. Benefiting from interest subsidies converted to US Dollars. en: Loans granted in Lebanese Lira to contractors for constructing or rehabilitating government buildings. pkg: Loans granted in Lebanese Lira to build a public parking garage for the purpose of renting parking spaces. ce: Loans granted in Lebanese Lira to industrial institutions to finance working capital against exports. Loan Granted. The ceiling of the loan granted by the bank in the loan currency as stated in the Central Council decision. Balance Used Principal without Interest. Principal debt balance as of Wednesday of each week. Accrued Interest. State the balance of the accrued interest account separately.

Central Bank of Lebanon – Risk Center Statement of Decision No. 7835 dated 2/6/2001 Basic Circular 84 Form No. -29ARO Residential Loans Benefiting from Exemptions in the Field of Mandatory Reserves (New or Modified Loans Suspended on / / ) Bank Name: Responsible Person: Bank Number: Phone Number: Central Council Decision Number: Decision Ceiling: Loan Currency: Loan Type**: Economic Sector: 02R - Purchase and construction of housing for individual or family residence New (1) Modified (2) Borrower Name Borrower Number at Risk Center * Loan Usage Area Code Loan Granted Debt Balance Date of Use (Day/Month/Year) Maturity Date (Day/Month/Year) Bank Signature (*) : A borrower identification card must be attached along with a copy of the ID card of the borrower who does not have a Risk Center number. (**) Code "2a" Residential Loans (Basic Decision No. 6101 dated 1996/2/8 - Basic Circular 22). Code "29n" Medium or long-term residential loans granted in Lebanese Lira before 2017/2/8 benefiting from 2009 incentives. Note: Attaching the loan with the deduction table -17ARO is a prerequisite for deductions. Code "29x" Medium or long-term residential loans granted before 8/2/2017 benefiting from 2009 incentives converted to US Dollars. Code "29a" Medium or long-term residential loans granted in foreign currencies benefiting from 2009 incentives. Code "27x" Medium or long-term residential loans granted after 7/2/2017 benefiting from 2009 incentives converted to US Dollars. Code "27n" Medium or long-term residential loans granted in Lebanese Lira after 2017/2/7 benefiting from 2009 incentives.

Central Bank of Lebanon

Explanation of Form 29-ARO:

Central Bank of Lebanon - Risk Center Statement of Decision No. 7835 dated 2/6/2001 Basic Circular 84 Form No. -30ARO Balances of Residential Loans Benefiting from Exemptions in the Field of Mandatory Reserves (Status suspended on Wednesday ___ / ___ / ______ ) Bank Name: Responsible Person: Bank Number: Phone Number: Central Council Decision Number: Decision Ceiling: Loan Currency: Loan Type*: Economic Sector: 02R - Purchase and construction of housing for individual or family residence Internal Loan Number Borrower Name Borrower Number at Risk Center Loan Granted Used Balance Principal without Interest (*) Code "2a" Residential Loans (Basic Decision No. 6101 dated 1996/2/8 - Basic Circular 22). Code "29n" Medium or long-term residential loans granted in Lebanese Lira before 2017/2/8 benefiting from 2009 incentives. Bank Signature Code "29x" Medium or long-term residential loans granted before 8/2/2017 benefiting from 2009 incentives converted to US Dollars. Code "27x" Medium or long-term residential loans granted after 7/2/2017 benefiting from 2009 incentives converted to US Dollars. Code "27n" Medium or long-term residential loans granted in Lebanese Lira after 2017/2/7 benefiting from 2009 incentives. From 2009 incentives. Code "29a" Medium or long-term residential loans granted in foreign currencies benefiting from 2009 incentives.

Central Bank of Lebanon

Explanation of Form 30-ARO:

Central Bank of Lebanon Directorate of Statistics and Economic Research Form No. : (1/5) -011RO

Liabilities in Lebanese Lira Subject to Mandatory Reserves Average between _______________ and_______________ Bank Name: Number: In Thousands of Lebanese Lira

Liabilities Number Name Liabilities Total Under Demand 20100 Other non-resident issuing institutions 20180 Less: Accrued unpaid interest non-resident 20200 Non-resident commercial banks 20250 Less: Credit accounts against debtor accounts non-resident 20280 Less: Accrued unpaid interest non-resident 20300 Resident and non-resident medium and long-term credit institutions 20370 Less: Credit accounts against debtor accounts 20380 Less: Accrued unpaid interest 20500 Registered resident and non-resident financial institutions 20560 Less: Credit accounts against debtor accounts 20580 Less: Accrued unpaid interest 23900 Other resident and non-resident financial sector institutions 23960 Less: Credit accounts against debtor accounts 23980 Less: Accrued unpaid interest Z20800 Customer deposits resident and non-resident (1) 20871 Less: Letters of credit guarantees for imports 20890 Less: Credit accounts against debtor accounts 20895 Less: Accrued unpaid interest 24300 Deposits resulting from credit contracts resident and non-resident 24301 Less: Accrued unpaid interest 20900 Public sector deposits 20980 Less: Accrued unpaid interest 21000 Values for payments resident and non-resident 21210 Various creditors - resident and non-resident private sector 21221 Various creditors - public sector demand accounts 21225 Cash guarantees for electronic operations 21300 Partners resident and non-resident 21325 Less: Accrued unpaid interest 21330 Less: Cash advances earmarked to cover inventory shortages 21350 Less: Deposits earmarked to increase own funds 21700 Debt securities and equivalents resident and non-resident 21748 Less: Accrued unpaid interest at fair value against profit and loss account 21755 Less: Accrued unpaid interest classified at amortized cost 23000 Branches abroad 23050 Less: Credit accounts against debtor accounts 23080 Less: Accrued unpaid interest Head Office, Parent Institution, Sister and Subsidiary Banks and Financial Institutions Z23100 Resident and non-resident (except resident commercial banks) 23150 Less: Credit accounts against debtor accounts 23180 Less: Accrued unpaid interest Bank Certificates at Fair Value against Profit and Loss Account resident and non-resident (except Z24600 Sold to resident commercial banks) 24680 Less: Accrued unpaid interest Bank Certificates at Amortized Cost resident and non-resident (except Sold to resident commercial banks Z24700 24780 Less: Accrued unpaid interest 99999 Total Liabilities in Thousands of Lebanese Lira 1() Except for savings/borrowing program accounts and deposits of the Volunteer Military Housing Device which previously benefited from deductions before 20/10/2017. Circular No. 475 dated 19 October 2017

Central Bank of Lebanon Form No. :(2/5) -011RO

Bank Name:___________________________ Number:______________

Status suspended on Wednesday at:_____________ From Total Liabilities (In Thousands of Lebanese Lira) Allowed Deductions from Total Liabilities in Lira

A Loan Balances Medium and Long Term :“1 Medium and Long Term Loans for Productive Sectors Not Listed Below - Code “a “ :“2 Residential Loans - Code “a “ :“3 Loans Benefiting from Interest Subsidies Not Listed Below - Code “a “ :“3 Loans Benefiting from Interest Subsidies and Converted to US Dollars Not Listed Below - Code “xa “ :“31 Loans Granted Based on the Agreement Signed between the Lebanese Republic and the European Bank for Reconstruction and Development - Code: a“ Which benefit from interest subsidies :“32 Loans Granted with financing from AFESD, AFD, OPIC, EIB, IFC which benefit from - Code “a “ Interest subsidies :“33 Loans Granted in Foreign Currency against Guarantee from AFESD, AFD, OPIC, EIB, IFC - Code “a “ Which benefit from interest subsidies :“34 Loans Earmarked to Finance Working Capital Needs of Tourist Institutions which benefit from - Code: a “ Interest subsidies :“0 Loans for Productive Sectors that have entered the extended repayment period and no longer benefit from - Code “a “ Interest subsidies. :“4 Loans Granted in Foreign Currency against Guarantee from Kafalat Company and benefiting from interest subsidies. - Code “a “ :“5 Loans Granted in Foreign Currency against Guarantee from Kafalat Company which benefit from interest subsidies - Code “a “ :“8 Loans Granted with financing from AFESD, AFD, OPIC, EIB, IFC which . benefit from - Code “a “ Interest subsidies :“9 Loans Granted in Foreign Currency against Guarantee from AFESD, AFD, OPIC, EIB, IFC - Code “a “ Which . benefit from interest subsidies
B Debt Securities and Debt Instruments :“1 Securities approved by the Central Bank of Lebanon, up to the purchase price - Code “b “ :“2 Foreign Currency Debt Instruments Purchased and Loans Granted to Financial Institutions and Investment - Code “b “ Collective Investment Bodies for the exclusive purpose of using them to purchase Foreign Currency Debt Instruments ⇒ Code :“21b “Public Sector Debt Instruments and Related Loans ⇒ Code :“22b “Private Sector Debt Instruments and Related Loans :“3 Debt Securities Issued by the Private Sector Benefiting from Deduction - Code “b “ Total Balances of Loans, Bonds, and Instruments Benefiting from Total Liability Deduction Equivalent to (A + B)

Central Bank of Lebanon Form No. :(3/5) -011RO

Bank Name:___________________________ Number:______________

Status suspended on Wednesday at:_____________

From Total Liabilities Allowed Deductions from Total Liabilities in Lira (In Thousands of Lebanese Lira)

C Loans Benefiting from Total Liability Deduction Equivalent to 200% of Their Balances :“19 Balances of Loans Granted in Foreign Currency for Productive Sectors Not Listed Below Benefiting from 2009 Incentives - Code “a “ :“29 Balances of Residential Loans Granted in Foreign Currency Benefiting from 2009 Incentives - Code “a “ :“49 Balances of Loans Granted in Foreign Currency against Guarantee from Kafalat Company Not Benefiting from Interest Subsidies - Code “a “ And Benefiting from 2009 Incentives :“89 Balances of Loans Granted with financing from AFESD, AFD, OPIC, EIB, IFC Not Benefiting from Interest - Code “a “ Subsidies and Benefiting from 2009 Incentives :“99 Balances of Loans Granted in Foreign Currency against Guarantee from AFESD, AFD, OPIC, EIB, IFC - Code “a “ Not Benefiting from Interest Subsidies and Benefiting from 2009 Incentives :“09