Issuing of Certificates of Deposit & Banking Certificates

Central Bank of Lebanon Circular No. 61

Also addressed to financial institutions and supervisory commissioners.

We enclose a copy of Basic Decision No. 7224 dated 1999/2/11 concerning the system for issuing certificates of deposit and banking certificates.

Beirut, 11 February 1999
Governor of Banque du Liban
Riad T. Salamah
Old No. 1701

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Basic Decision No. 7224

System for Issuing Certificates of Deposit and Banking Certificates

The Governor of Banque du Liban,
Pursuant to the Monetary and Credit Law, particularly Articles 70, 124, 174, and 175 thereof; Pursuant to the law implemented by Decree No. 5439 dated 20 September 1982; Pursuant to the provisions of Articles 6 to 10 of Legislative Decree No. 50 dated 15 July 1983, which regulate the issuance of certificates of deposit by commercial banks and medium/long-term credit banks; Pursuant to the approval of the Central Council in its meeting held on 1999/2/10,

Decides as follows:

Article 1: The system for issuing certificates of deposit and banking certificates is hereby implemented.

Article 2: The following regulatory provisions issued by Banque du Liban are repealed:

• Decision No. 5527 dated 1994/6/8, implemented by Circular No. 1256 dated 1994/6/8.
• Decision No. 5801 dated 1995/2/16, implemented by Circular No. 1318 dated 1995/2/16.
• Decision No. 5802 dated 1995/2/16, implemented by Circular No. 1319 dated 1995/2/16.
• Decision No. 6570 dated 1997/4/24, implemented by Circular No. 1518 dated 1997/4/24.
• Decision No. 6730 dated 1997/9/18, implemented by Circular No. 1558 dated 1997/9/18.

Note: Circular numbers are according to the old numbering.

Article 3: This decision takes effect immediately upon issuance.

Article 4: This decision shall be published in the Official Gazette.

Beirut, 11 February 1999
Governor of Banque du Liban
Riad T. Salamah

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Regulations for Issuance

Article 1: All banks operating in Lebanon must, prior to accepting time deposits in exchange for issuing certificates of deposit, notify Banque du Liban in writing at least fifteen days before the start date of each issuance, stating the total value of the proposed issuance, its terms and conditions, and any renewals, according to the attached form (Document No. 1).

Article 2: At the time of issuance, the total value of outstanding certificates of deposit issued by a Lebanese bank and any bank in which it owns more than 50% of the shares shall not exceed six times the Lebanese bank's net basic equity. Similarly, at the time of issuance, the total value of outstanding certificates of deposit issued by a foreign bank branch shall not exceed six times the net equity allocated to it.

Article 3: Certificates of deposit may be to order, bearer, or registered, issued in Lebanese Lira or any other deposit currency.
Temporarily, until further notice, banks are prohibited from issuing certificates of deposit to order of a named person only, and these certificates must explicitly and visibly state that they are non-transferable by blank endorsement. However, the Central Council may, for reasons it deems fit and under conditions it specifies, exceptionally approve the issuance of bearer certificates of deposit.

Article 4: A certificate of deposit shall not be issued for an amount less than one hundred million Lebanese Lira or fifty thousand US Dollars, or the equivalent of the latter in foreign currencies, at the time of issuance.

Article 5: Specialized banks (commercial banks and medium/long-term credit banks) cannot issue certificates of deposit with a term less than six months or exceeding ten years. Other banks cannot issue certificates of deposit with a term less than three months or exceeding five years. The provisions of the first paragraph of this Article apply to banks established by special laws insofar as they do not conflict with the specific provisions applicable to them.

Article 6: Certificates of deposit must be issued at their nominal value, with interest calculated on the basis of 365 days per year.

Article 7: Banks must use the attached form (Document No. 2) when issuing certificates of deposit.

Article 8: Each issuance of a certificate of deposit must be preceded by a contract with the depositor.
The contract must state the amount received by the bank, the agreed issue and maturity dates, the interest rate, the method of calculation, the method and place of payment, the issuing serial number, and the certificate serial number.

Article 9:

1. The issuance of certificates of deposit is restricted to the main office of the issuing Lebanese bank or the main branch in Lebanon of the issuing foreign bank.
2. A foreign bank branch operating in Lebanon is prohibited from issuing certificates of deposit without prior approval from its head office.
3. The issuing bank must maintain a separate, dedicated ledger for each currency in which certificates of deposit are issued, recording the basic information related to each total issuance and each issued certificate.

Article 10: The transfer and endorsement of certificates of deposit are subject to the provisions of the Commercial Code regarding the transfer and endorsement of securities.

Article 11:

1. Issuing banks are strictly prohibited from discounting or purchasing directly or indirectly the certificates of deposit they issue.
   Any purchase or discount operation conducted by any bank or financial institution that is part of the same economic group as the issuing bank or is affiliated with it in any way (subsidiary or sister company) is considered an indirect purchase or discount operation.
2. All certificates of deposit are non-discountable and non-purchasable by Banque du Liban for the benefit of the issuing bank itself.

Article 12: "Banking Certificates," issued by banks against funds received from other banks and financial institutions, are subject to the same conditions and provisions imposed under this decision on certificates of deposit. Compliance with the attached forms (3 and 4) is also mandatory for them.

Article 13: Banks preparing a prospectus for marketing certificates of deposit and banking certificates must clearly and explicitly state that Banque du Liban has no relation to its content. They are also required not to distribute the prospectus without first notifying Banque du Liban.

Article 14: The investments of any bank or financial institution in banking certificates issued by another bank shall not exceed 100% of the issuer's basic equity.

Article 15: Relevant banks must provide Banque du Liban, monthly, in three copies, with a detailed report on the status of certificates of deposit and outstanding banking certificates for each issuance, according to the attached form (Document No. 5).

Article 16: The regulatory provisions issued by Banque du Liban regarding the exclusion of the value of certificates of deposit and banking certificates issued by banks in foreign currency, which have at least one year remaining until maturity, and are sold to resident and non-resident persons, banks, and financial institutions not affiliated with Lebanese banks, from the foreign currency lending ceiling, shall be observed.

Article 17: Supervisory commissioners at the issuing bank must, under their sole responsibility, continuously verify the validity of the issuance operations of certificates of deposit and banking certificates, their non-fictitious nature, and the availability of the required legal and regulatory conditions. They must immediately report to Banque du Liban and the Banking Control Commission upon discovering any violations or discrepancies with this decision and the prevailing laws.

Article 18: A non-compliant bank shall be referred to the High Banking Commission to face administrative sanctions against it, in accordance with the provisions of Articles 208 and 209 of the Monetary and Credit Law.

Article 19:

1. Any bank may request Banque du Liban to apply rules different from those stipulated in Articles 5 to 10 of this system, specifically regarding certificates of deposit and banking certificates issued for marketing abroad.

Article 20: The principal and interest of all certificates of deposit and banking certificates issued by banks operating in Lebanon and deposited with a custodian in Lebanon shall be settled in the accounts of the beneficial owners opened at banks operating in Lebanon. The same exceptional procedures applied by "Medclear S.A.L." for transferring all certificates of deposit and banking certificates referred to in this Article abroad shall apply.

1. Added by Decision No. 7296 dated 1999/5/21 (Circular 1729 - old numbering).
2. This Article was added by Article 2 of Interim Decision No. 13187 dated 2020/1/30 (Interim Circular 541), which takes effect for six months from its date, and was subsequently extended several times, last until 2026/6/30, pursuant to Interim Decision No. 13793 dated 2026/1/9 (Interim Circular 752).

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Appendix 1 (Document No. 1)

Letter Template

To the attention of Banque du Liban regarding the issuance of certificates of deposit.
Pursuant to Basic Decision No. [Date] implemented by Basic Circular for Banks and Supervisory Commissioners No. [Date], We hereby inform you that we will proceed with issuing certificates of deposit to order against time deposits, in accordance with prevailing Lebanese laws and regulations.

Issuance Details:

• Total issuance value:
• Certificate nominal value:
• Maturity date: (...) from the date of issuance.
• Interest rate:
• Interest payment method:
• Certificate type: To order of a named person.
• Endorsement: To order of a named person.
• Issuing serial number:
• Date of issuance:
• Certificate numbers for this issuance from ....... to ........

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Certificate of Deposit Form (Document No. 1)

Certificate of Deposit to Order
Non-transferable by blank endorsement

Field	Value
No.	[ ]
Serial No.	[ ]
Issuing No.	[ ]
Nominal Value	[ ]
Amount in Words	[ ]
Maturity Date	[ ]
Interest Rate	[ ]
Interest Calculation Method	[ ]
Interest Payment Method	[ ]
Certificate Value at Maturity	[ ]
Place of Payment	[ ]

On the maturity date and by virtue of this certificate of deposit, we pay to the order of: [ ] Against endorsement of this certificate, the nominal value plus due interest. This certificate is subject to Lebanese laws and regulatory decisions issued by competent authorities. Place and Date of Issue: [ ] | Authorized Signatures: [ ] | Bank: [ ]

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Certificate of Deposit Form (Document No. 2)

Certificate of Deposit to Order
Not valid for blank endorsement

Field	Value
No.	[ ]
Issuing No.	[ ]
Nominal Value	[ ]
Amount in [ ]	[ ]
Maturity Date	[ ]
Interest Rate	[ ]
Computation of Interest	[ ]
Modality of Payment of Interest	[ ]
Value of Certificate at Maturity	[ ]
Place of Payment	[ ]

On the maturity date and by virtue of the certificate of deposit, we pay to the order of: [ ] Against endorsement of this certificate, total value including nominal and interest due. This certificate is subject to the provision of the Lebanese law and to the directives issued by the relevant authorities. Place and Date of Issue: [ ] | Authorized Signatures: [ ] | Bank: [ ]

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Selected Articles & General Provisions

Selected articles of Basic Decision No. [Date] issued:

• Art. 4: Minimum denomination LBP 100,000,000 or USD 50,000 or equivalent.
• Art. 6: Issued at nominal value, interest calculated on 365-day basis.
• Art. 8: Contract required with depositor detailing amount, dates, rate, calculation, payment method/place, serial numbers.
• Art. 10: Transfer/endorsement subject to Commercial Code on securities.
• Art. 11: 1) Strictly prohibited for issuing banks to discount/purchase their own CDs directly or indirectly. Purchases by affiliated/group entities count as indirect. 2) Banque du Liban strictly prohibited from discounting/purchasing for issuer's benefit.
• Art. 17: Auditors must continuously verify validity/compliance and report violations to BDL and Banking Control Commission.
• Art. 18: Violators referred to High Banking Commission for administrative sanctions per Arts 208 & 209 of Monetary and Credit Law.

General Provisions:

• CD to order is transferable by endorsement to a named person.
• Any natural or legal person may hold this certificate.
• Interest due to the holder is exempt from tax on movable capital gains per Title 3 of the Income Tax Law, but remains subject to income tax when included in the profits of banking, financial, or commercial institutions per Article 1 of Decree No. 5429 dated 1982/9/20 and 1982/10/7.
• The issue date is not included in the interest period.
• If the expected maturity date falls on a day banks are closed for any reason, the certificate shall be paid on the first business day following the closure without any additional interest due to the holder.

Footnotes on tax law references (Law 497/2003, Finance Minister Decision 1/403/2003).

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Appendix 3/4 (Document No. 3 & 4)

Letter Template for Banking Certificates

To the attention of Banque du Liban regarding the issuance of banking certificates.
Pursuant to Basic Decision No. [Date] implemented by Basic Circular for Banks and Supervisory Commissioners No. [Date], We hereby inform you that we will proceed with issuing banking certificates against funds received from banks and financial institutions, in accordance with prevailing Lebanese laws and regulations.

Issuance Details:

• Total issuance value:
• Certificate nominal value:
• Maturity date: (...) from the date of issuance.
• Interest rate:
• Interest payment method:
• Certificate type: To order of a named person.
• Endorsement: To order of a named person.
• Issuing serial number:
• Date of issuance:
• Certificate numbers for this issuance from ....... to ........

Interbank Certificate Form (Document No. 4)

Interbank Certificate to Order
Not valid for blank endorsement

Field	Value
No.	[ ]
Serial No.	[ ]
Issuing No.	[ ]
Nominal Value	[ ]
Amount in Words	[ ]
Maturity Date	[ ]
Interest Rate	[ ]
Interest Calculation Method	[ ]
Interest Payment Method	[ ]
Interbank Certificate Value at Maturity	[ ]
Place of Payment	[ ]

On the maturity date and by virtue of this banking certificate, we pay to the order of: [ ] Against endorsement of this interbank certificate, the nominal value plus due interest. This interbank certificate is subject to Lebanese laws and regulatory decisions issued by competent authorities. Place and Date of Issue: [ ] | Authorized Signatures: [ ] | Bank: [ ]