Reserve Requirements and Facilities that may be granted by BDL to banks and financial institutions

Circular No. 646
To Banks and Financial Institutions

Enclosed is a copy of Mediator Decision No. 646, dated 12/10/2022, amending:

• The Basic 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 Basic Circular No. 23.
• The Basic Decision No. 7835 dated 2/6/2001 (Mandatory Reserves) attached to Basic Circular No. 84.

Beirut, on 12 October 2022
Governor of the Central Bank of Lebanon
Riad T. Safieh

Mediator Decision No. 13487
Amending Basic Decision No. 6116 dated 7/3/1996 and Basic Decision No. 7835 dated 2/6/2001

The Governor of the Central Bank of Lebanon,
Pursuant to the Monetary and Credit Law, particularly Articles 174, 70, 76, and 79 thereof; Pursuant to Basic Decision No. 6116 dated 7/3/1996 and its amendments concerning the facilities that may be granted by the Central Bank of Lebanon to banks and financial institutions; Pursuant to Basic Decision No. 7835 dated 2/6/2001 and its amendment concerning mandatory reserves; Pursuant to the decision of the Central Bank Council taken in its meeting held on 5/10/2022;

Decrees as follows:

Article One: The text of "Article 12 bis" of Basic Decision No. 6116 dated 7/3/1996 is repealed and replaced by the following text:
"As an exception and for regulatory easing, prepayment of loans subject to "Article 9 bis", "Article 10", and "Article 11 bis" of this Decision is permitted without obtaining the approval of the Central Bank of Lebanon regarding the following loans:

• All residential loans.
• Loans granted for higher education studies.
• Environmental loans, each exceeding thirty million Lebanese pounds.
  The client shall bear the penalties stipulated in this Decision resulting from prepaying their residential loan balance before seven years have passed since its implementation. Disbursements granted by the Central Bank of Lebanon are suspended against each prepaid loan, upon notification to the Financing Unit at the Central Bank and submission of updated repayment schedules when necessary. The Banking Supervision Commission shall subsequently verify the validity of residential loan usage and their compliance with approved purposes."

Article Two: The text of "Article 21 bis" of Basic Decision No. 7835 dated 2/6/2001 is repealed and replaced by the following text:
"As an exception and for regulatory easing, prepayment of loans subject to this Decision is permitted without obtaining the approval of the Central Bank of Lebanon regarding the following loans:

• All residential loans.
• Loans granted for higher education studies.
• Environmental loans, each exceeding thirty million Lebanese pounds.
  The client shall bear the penalties stipulated in this Decision resulting from prepaying their residential loan balance before seven years have passed since its implementation. The allocation of obligations partially subject to mandatory reserves and the deduction of mandatory reserves against each prepaid loan is suspended, upon notification to the Financing Unit at the Central Bank. The Banking Supervision Commission shall subsequently verify the validity of residential loan usage and their compliance with approved purposes."

Article Three: The provisions of Articles One and Two above shall apply to prepayment requests submitted by the Central Bank of Lebanon prior to the date of this Decision, for which no approval decision has yet been issued.

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

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

Beirut, on 12 October 2022
Governor of the Central Bank of Lebanon
Riad T. Safieh