Central Bank of Libya Circular 20/2024: Regulations for Salary-Based Purchase Limits

Central Bank of Libya P.O. Box 1103 | Telegram Address: MisrLibya - Tripoli, Libya

Reference: A.R.M No. 1055 ( ) Circular: A.R.M No. (20/2024) Date: 30 Jumada al-Thani 1446 AH Corresponding to: December 2, 2024

To: General Managers of Banks After greetings...

Subject: Regulations for granting purchase limits based on individual salaries

Based on the provisions of Law No. (1) of 2005, and its amendments, and on the supervisory and regulatory role exercised by the Central Bank of Libya over banks in accordance with legal provisions.

In support of the Central Bank of Libya's efforts to develop and diversify bank products through electronic payment services to meet customer needs, aligning with its approved strategy for providing practical solutions to cash liquidity issues and encouraging the use of various electronic payment methods.

Accordingly, we inform you of the issuance of the Central Bank of Libya's instructions regarding granting banks the authority to provide their customers with a limit (interest-free loan), for those whose salaries are regularly credited to the banks, such that this limit is designated for electronic payment transactions via available services, based on salary strength, according to the following regulations:

1. The bank is committed to launching the specified purchase limit through electronic payment services it offers, whether via electronic cards or mobile applications.
2. The limit granted to customers is a form of interest-free loan (Qard Hasan) and takes all its Sharia-compliant provisions, conditions, and regulations, most importantly: no commissions are charged on the used amount whether fixed or percentage-based, and customers are not required to subscribe to any additional services in exchange for obtaining the limit.
3. The service is provided upon customer request, either through bank mobile applications, SMS services, or via forms signed by the customer, provided that all product terms and conditions are clearly stated and approved by the bank's Sharia Supervision Board.
4. Each bank must establish its policies and regulations governing the service, clearly outlining the target beneficiaries, conditions, and all necessary procedures to ensure the bank's and customers' rights. The bank may set eligibility criteria, restrict usage scenarios, set a fixed loan limit, link it to salary value, or apply other conditions, provided they do not conflict with its financing policies or any legal regulations.

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Central Bank of Libya P.O. Box 1103 | Telegram Address: MisrLibya - Tripoli, Libya

5. Bank customers who have active current accounts and whose salaries are regularly credited to the bank for at least six months are eligible for this service.
6. The granted limit shall not exceed 60% of the net salary after deducting any installments or obligations owed by the customer.
7. The used amount from the limit is deducted upon salary credit, and the limit automatically renews after coverage and salary receipt, unless either party decides not to renew.
8. The bank's Board of Directors and Sharia Supervision Board shall adopt the product policies, operational manuals, regulations, conditions, and forms, provided they do not conflict with the specific regulations issued by the Central Bank of Libya.
9. The bank may take all technical and legal measures to recover its rights from the customer in case of inability to prove insolvency status.
10. The bank may refrain from providing an interest-free loan to any customer who has previously defaulted on prior transactions with the bank, or for other reasons as determined by approved regulations and policies, to limit any potential risks to the bank.

Accordingly, and for importance, you are requested to work on launching the product and preparing your systems to utilize this limit in electronic payment transactions, in accordance with the above conditions and regulations.

Peace, mercy of Allah, and blessings be upon you.

Abdul Majeed Mohammed Al-Maqouri Director, Banking and Currency Supervision Department

Copies to: Mr./ The Governor Mr./ The Deputy Governor Mr./ Director, Payments and Settlements Department - Central Bank of Libya Mr./ Deputy Director, Banking and Currency Supervision Department for Islamic Banking Affairs Mr./ Deputy Director, Banking and Currency Supervision Department for Office Supervision and Compliance Monitoring Mr./ Deputy Director, Banking and Currency Supervision Department for Inspection Affairs Messrs/ Deputy Directors, Banking and Currency Supervision Department for Banking Supervision / Benghazi Islamic Banking Department

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