Central Circular No. 574 – Documentary Credits

Central Circular No. 574
To Banks

We enclose a copy of Central Decision No. 13288 dated November 4, 2020, amending Central Decision No. 7144 dated October 30, 1998, concerning Documentary Credits and Bills of Lading attached to Central Circular No. 52.

Beirut, November 4, 2020
Governor of the Central Bank of Lebanon
Riad T. Salam

Central Decision No. 13288
Central Decision No. 7144 dated October 30, 1998

The Governor of the Central Bank of Lebanon,
Based on the Monetary and Banking Law, specifically Articles 174 and 70 thereof, Based on Central Decision No. 7144 dated October 30, 1998 and its amendment concerning Documentary Credits and Bills of Lading, Based on the decision of the Central Council of the Central Bank of Lebanon taken in its meeting held on October 28, 2020, Decides as follows:

Article One: The following "Third" paragraph is added to Article One of Central Decision No. 7144 dated October 30, 1998:
"Third: Banks are prohibited from granting their customers facilities to form the cash margin referred to in the 'First' paragraph of this Article."

Article Two: The following "Article One bis" text is added to Central Decision No. 7144 dated October 30, 1998:
"Article One bis: Exceptional procedures for import and export: Requested, exceptionally as long as the concept of Central Decision No. 13217 dated April 9, 2020 remains in force from customers:
First: Forming the margin referred to in Article One above against import and transit credits, triple credits, equipment and supplies credits issued for foreign entities, and against deferred payment import bills, guaranteed or unguaranteed (Banknotes) or from funds transferred from abroad in a new account (account fresh) upon creation of the obligation by the bank (when opening the credit or issuing the guarantee or delivering the import bill...) to be retained until final settlement of the obligation or the resulting acceptance. ../..

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Second: Full repatriation of foreign currency resulting from export operations to the (account fresh) account, whether exports are via bills or documentary credits, and concerned banks must verify this and take appropriate measures to follow up on the matter. Customers are free to use these funds for benefiting from all banking services provided by the bank, including foreign exchange and cash deposits, and banking card services in Lebanon and abroad."

Article Three: This decision takes effect upon its issuance.
Article Four: This decision is published in the Official Gazette.

Beirut, November 4, 2020
Governor of the Central Bank of Lebanon
Riad T. Salam