Law No. 1 of 2013 Regarding the Prevention of Riba Transactions

Issue (5) Page Number 241

Law No. (1) of 2013 Regarding the Prevention of Riba Transactions

After reviewing:

• The Provisional Constitutional Declaration issued on 03/August/2011 and its amendments.
• Law No. (1) of 2005 concerning Banks and its amendments.
• Law No. (23) of 2012 concerning the Commercial System.
• The Internal Regulations of the Congress.
• And what the General National Congress concluded in its session held on 06/01/2013.

The following Law is issued:

Article (1) Dealing with creditor and debtor interest is prohibited in all civil and commercial transactions conducted between natural and legal persons, and any riba (usurious) interest, whether apparent or hidden, resulting from these transactions is absolutely void. Any commission or benefit, regardless of its nature, stipulated by the creditor is considered hidden interest if it is proven that this commission or benefit does not correspond to a real, legitimate benefit or service actually provided by the creditor.

Article (2) It is not permissible to collect riba interest resulting from civil or commercial transactions due before the date of implementation of this law, which have not yet been paid, even if a final judgment has been issued regarding them.

Article (3) The debtor is obliged to repay the principal debt arising from the transactions specified in Article One of this law according to the agreed repayment arrangements.

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Issue (5) Page Number 242

Article (4) A fund named the "Qard Hasan Fund" is established by this law, possessing legal personality and independent financial status. Its bylaws are issued, and its resources in terms of type and amount, as well as the purposes and conditions of lending, are determined by a decision of the Board of Directors of the Central Bank of Libya, and it is subject to its supervision and oversight, provided that state contributions and those of its institutions are included among its resources.

Article (5) The provisions regarding riba interest contained in current legislation are not applicable, and every word or phrase referring to riba interest wherever it appears in those legislations is considered repealed, with respect to the transactions mentioned above. Relevant authorities must organize civil, commercial, and banking transactions in full compliance with the provisions of Islamic Sharia.

Article (6) Anyone who violates any of the provisions of Articles One and Two of this law shall be punished with imprisonment for a period of not less than one year or a fine of not less than one thousand dinars and not exceeding five thousand dinars. The penalty shall be imprisonment for a period of not less than two years or a fine of not less than five thousand dinars and not exceeding ten thousand dinars if the creditor exploits the debtor's need, weakness, or desires, or if the creditor is habitual in lending with riba.

Article (7) This law applies to transactions between legal persons starting from 01/01/2015.

Article (8) The provisions of this law come into effect from the date of its publication in the Official Gazette, and every provision conflicting with its provisions is repealed.

General National Congress - Libya

Issued in Tripoli On Monday Date: 25/Safar/1434 AH. Corresponding to: 07/01/2013 AD.