BDL latest circular 646 on the closing off of subsidized loans

On 12/10/2022, the Central Bank issued a new circular no. 646 stating that clients are allowed to make advance payments without the approval of BDL on the following loans:

  • Housing loans
  • Study Loans
  • Environmental loans less than LBP 30M

As a matter of fact, in the past three years, residents were settling the above facilities in USD on the exchange rate 1507.5 LBP per USD on a monthly basis. As such, with the latest BDL circular, residents are now allowed to settle in advance their whole exposure without the approval of BDL and without commission fees. The circular applies to subsidized credit and to credit benefiting from deductions from reserve requirements (the bulk of the loans) and credit benefiting from deductions from banks liabilities subject to reserve requirements.

In fact, in an effort to unify the country’s multiple exchange rates, Lebanon will employ a new official exchange rate of 15,000 Lebanese pounds to the dollar as opposed to the now-obsolete rate of 1,507 once the recovery plan is approved by the Lebanese parliament. Nevertheless, according to the Prime Minister Najib Mikati, the implementation of the new official exchange rate will exclude housing loan and other loans, to which the old exchange rate 1507.5 will still apply.  We expect that BDL aims to collect all mentioned exposures on the rate 1507.5 LBP per USD before the implementation of the new exchange rate.

BDL latest circular 646 on the closing off of subsidized loans

Source: BDL, Blominvest

 

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