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

Central Bank of Libya P.O. Box 1103 Telegraphic Address: MisrLibya - Tripoli - Libya

Reference: A.R.M No. 1055 Circular: A.R.M No. (20/2024) Date: 30 Jumaada Al-Awwal 1446 Corresponding Date: December 2, 2024

To: General Managers of Banks Greetings...

Subject: Guidelines for Granting Purchase Limits Based on Individual Salaries

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

And within the framework of supporting the Central Bank of Libya in developing and diversifying products offered by banks through electronic payment services to meet the needs of their customers, in line with its approved strategy regarding implementing practical solutions to mitigate cash liquidity issues and encouraging the use of various electronic payment methods.

Therefore, 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 (an interest-free loan/Qard Hasan), for those whose salaries are credited to the banks regularly, such that this limit is dedicated to electronic payment transactions via available services, based on the salary, according to the following guidelines:

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

Page 1 of 2

---

Central Bank of Libya P.O. Box 1103 Telegraphic Address: MisrLibya - Tripoli - Libya

5. The service is available to bank customers who have active current accounts and whose salaries are credited to the bank regularly for a period of no less than six months.
6. The granted limit shall not exceed 60% of the net salary after deducting any installments or obligations owed by the customer.
7. The utilized value from the limit is deducted directly upon the arrival of the salary, and the limit is automatically renewed after coverage and salary arrival, unless either party decides not to renew.
8. The bank's Board of Directors and the Shariah Supervisory Board shall approve the product's policies, operational manuals, guidelines, conditions, and templates, ensuring they do not conflict with the 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 the event of the customer's inability to prove a state of insolvency.
10. The bank may refuse to provide an interest-free loan to any customer who has previously defaulted on transactions with the bank, or for other reasons determined by approved guidelines and policies, to mitigate any risks the bank may face.

Therefore, and due to its importance, you are requested to work on launching the product and preparing your systems to use this limit for electronic payment transactions in accordance with the above-mentioned conditions and guidelines.

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

Abdulmajid Muhammad Al-Maqouri Director of Banking and Currency Supervision Department

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

Page 2 of 2