Central Bank of Lebanon Decision No. 13213 Amending Decision No. 6116 on Facilities for Banks and Financial Institutions

Circular No. 547

For Banks and Financial Institutions

We enclose a copy of Decision No. 13213 dated 23/3/2020 regarding the amendment of 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 Circular No. 23.

Beirut, March 23, 2020

Governor of the Central Bank of Lebanon

Riad T. Salam

Decision No. 13213

Amending Decision No. 6116 dated 7/3/1996

The Governor of the Central Bank of Lebanon,

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

And pursuant to 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 in light of the public interest in the current exceptional circumstances through which the country is passing,

And based on the principle of continuity of the public service,

And based on the powers vested in the Governor to ensure the operation of the Central Bank of Lebanon,

Decides as follows:

Article One: Article 14 bis is added to Decision No. 6116 dated 7/3/1996 with the following text:

"Article 14 bis: First: Banks and financial institutions operating in Lebanon shall grant, at their own responsibility, exceptional loans in Lebanese Lira or US Dollars to their clients who benefit from loans of all kinds previously granted by the relevant bank or financial institution, including those benefiting from state interest subsidies or mandatory reserve reductions against them, or from the provisions of "Article 9 bis", "Article 10", "Article 11", and "Article 11 bis" of Decision No. 6116 dated 7/3/1996, and who are unable to settle their obligations for three months (March, April, and May 2020) due to the current circumstances, subject to the following conditions:

1. The exceptional loans must be granted for the following purposes: a) Settlement of installments and loans previously granted that are due for the three months mentioned above. b) Payment of salaries for employees and workers of the concerned clients, or covering production or operational needs during the aforementioned period, in case the client is an institution or company.

2. Banks and financial institutions must ensure, at their own responsibility, the need of the concerned client to cover these obligations.

3. These loans shall be granted regardless of the ceilings determined for each client.

4. No commission or interest shall be charged on these loans (i.e., at 0% interest).

5. These loans shall be repaid within a period of five years in installments due at the end of each month or each quarter as specified in the contract signed between the relevant bank or financial institution and the client, starting from 6/1/2020 or at the end of the month following the month in which the exceptional loan was granted, whichever is later.

6. The relevant banks or financial institutions shall pay the salaries, subject to paragraph (b) of item (1) of the "First" section hereof, directly to the employees and workers of the concerned clients according to the salary schedules provided by these clients.

Second: The Central Bank of Lebanon shall grant US Dollar advances at 0% interest for a period of five years, equal to the value of the exceptional loans granted in Lebanese Lira or US Dollars, according to this Article, upon submission of complete applications.

Third: In order to benefit from the provisions of this Article, banks and financial institutions concerned shall submit, starting from 26/3/2020 and within a maximum deadline of 31/3/2020, to the Operations Directorate of the Central Bank of Lebanon, aggregate approval requests for loans granted under the provisions of this Article, specifying the total amounts intended to be granted, accompanied by a table listing the names of benefiting clients and the value of loans granted to each, according to the attached template.

Fourth: Banks and financial institutions concerned shall retain all documents related to the loans granted under the provisions of this Article, such that the Banking Control Commission can review them at any time. These documents must include the loan contracts signed with clients and repayment schedules.

Fifth: To calculate the value of advances granted by the Central Bank of Lebanon, the average exchange rate of the loan currency granted to the client in Lebanese Lira as of the date of the Central Bank of Lebanon's approval of the request of the relevant bank or financial institution shall be adopted.

Sixth: Advances granted by the Central Bank of Lebanon to banks and financial institutions concerned shall be repaid within the maturity period of the loans granted by them according to the final provisions of this Article, in monthly installments due on the first of the month following the month in which the Central Bank of Lebanon's approval was issued or on 6/1/2020, whichever is later.

Seventh: Each bank or financial institution bears the responsibility for the correctness and proper implementation of this Article. The relevant bank or financial institution shall be liable to repay the value of advances granted by the Central Bank of Lebanon for each loan granted in violation of the provisions of this Article, and to pay compensation in the form of a penalty clause amounting to 15% of the loan value, and to deposit a special minimum reserve at the Central Bank of Lebanon generating interest equal to double the value of the mentioned advances against this loan for a period equal to the duration during which the Central Bank of Lebanon advances were utilized, all without prejudice to the administrative penalties stipulated in Article 208 of the Monetary and Banking Law.

Eighth: The Banking Control Commission shall ensure the proper implementation of the provisions of this Article, particularly verifying the documents related to these loans."

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

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

Beirut, March 23, 2020

Governor of the Central Bank of Lebanon

Riad T. Salam

Bank/Financial Institution: Central Bank of Lebanon Registry Number: Table of Exceptional Loans to Cover Obligations for March, April, and May 2020 Information on the Loan whose installments are being covered Loan Grant Date Balance as of 31/3/2020 Risk Type Code Central Registry Number Borrower Name Total Installments Due for March, April, and May 2020 Value of Salaries and Operational and Production Needs for 3 Months Value of Exceptional Loan to Cover Obligations for March, April, and May 2020