Libya: lending & credit regulation

Regulated

Libya lending regulated by CBL under Sharia-compliant frameworks; no formal VASP/consumer credit licensing regime

Lead regulator:: Central Bank of Libya
Key law:: Law No. 1 of 2017 (Sustainable Credit) and CBL Circulars
Last updated:: 2026-07-12

Lending and consumer credit in Libya are strictly regulated by the Central Bank of Libya (CBL), which oversees commercial banks and financing entities through a series of circulars and decisions. The regulatory framework is grounded in Sharia-compliant principles, explicitly prohibiting interest-based loans in favor of structures like Qard Hasan (interest-free loans). Recent directives have focused on enabling salary-backed purchase limits for electronic payments while enforcing strict credit concentration and internal control standards.

The CBL mandates the use of a central credit inquiry system and requires the National ID as the primary identifier for all borrowers, ensuring robust data collection and risk mitigation. Specific restrictions include caps on credit portfolios relative to deposit liabilities and limits on exposures to related groups. The regulatory environment is characterized by detailed operational guidelines rather than a broad, standalone consumer credit licensing act for non-bank entities.

Recent directions of travel indicate a push towards digital integration and standardized credit reporting, with the CBL actively updating guidelines on financial structures and credit facility conditions. The regulator continues to enforce strict governance and internal control evaluations for banks, reflecting a focus on stability and compliance within the formal banking sector.

Who regulates

Central Bank of Libya
Primary supervisor of commercial banks and financing entities, issuing circulars on credit limits, internal controls, and Sharia-compliant lending products.
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Core laws & rules

Law No. 1 of 2017 (2017)
Establishes the framework for sustainable credit applications and budget approvals, directing banks to use the Ministry of Economy’s electronic portal.
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CBL Decision No. 2 of 2010 (2010)
Establishes strict limits for credit concentration, replacing 2008 regulations and capping individual or related group exposures at 20% of core capital.
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CBL Decision No. 3 of 2010 (2010)
Defines maximum limits for bank financial structures and credit portfolios, capping net direct credit portfolios at 70% of total deposit liabilities.
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Licensing & registration

Banking and Financing Entities
Commercial banks and financing entities are required to operate under CBL licenses and comply with mandatory credit inquiry systems and internal control evaluations.
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Salary-Based Purchase Limits
Banks are authorized to offer salary-backed purchase limits structured as Sharia-compliant interest-free loans (Qard Hasan), restricted to customers with active current accounts and six months of regular salary. Timeline: Authorized via Circular 20/2024
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Restrictions & warnings

Salary-backed purchase limits must not exceed 60% of the net salary after deductions and are structured as interest-free loans.
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Individual or related group credit exposures must not exceed 20% of a bank's core capital, with aggregate exposure limits also defined.
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Net direct credit portfolios are capped at 70% of total deposit liabilities, and overdraft facilities are restricted to short-term operations.
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Banks must mitigate credit risks from loans to former regime figures and actively pursue debt collection according to regulatory guidelines.
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Direction of travel

The CBL is actively updating regulatory frameworks to enhance digital integration, including the mandatory use of the National ID for borrowers and the implementation of a central credit inquiry system.
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Regulatory focus remains on strengthening internal controls, governance, and accurate accounting frameworks within commercial banks to ensure financial stability.
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Sources

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This guide is compiled automatically from 11 primary-source documents published by Libya's regulators, reviewed by RegAlert, and refreshed monthly (last updated 2026-07-12). It is not legal advice — always confirm requirements with the regulator or local counsel before acting.