Delay in implementing loan and salary financing

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Banks have started receiving requests from their clients concerning refinancing due loan payments and payroll as required by Circular 547 recently issued by The Central Bank (BDL).

Banks are required, according to the circular, to provide zero-percent financing to companies and individuals to cover overdue loan installment payments, salaries, and operational expenses. The banks’ customers can benefit from the loans exclusively during the period from March 2020 to May 2020.

Banks contacted by Lebanon Opportunities, some speaking on condition of anonymity, have indicated their willingness to follow BDL’s directive, but are waiting for more clarifications regarding the implementation of the circular. They expect to start procedures in the coming few days or next week.

Elie Abou Khalil Head of Retail Products at Byblos Bank Group said that most banks are preparing to apply the circular.

Abou Khalil said that the Association of Banks is consulting BDL’s Banking Control Commission (BCCL) on how to apply the circular. He said that BCCL will issue a detailed clarification in this regard.

Abou Khalil said that the required system is being set up to start applying the circular in the coming few days.

A top manager in a large bank said they have started receiving applications from their customers and that they are awaiting further clarifications from BDL on the legal aspect of the new credit facilities especially in the case of a client’s default. The source said almost all banks will be applying the circular by next week. “I don’t expect that the banks will accept to provide the new facilities to customers that have defaulted in the past. Only regular customers with a healthy credit profile can benefit,” another banker said.

Another bank said that they have already started the implementation of the circular and that they have received applications from schools and universities as well as from employees.

The banks’ customers will be allowed to repay the new loans over five years. For their part, the banks will receive five-year credit facilities in dollars at zero-interest rate from BDL against the loans they provide to their clients under the circular.

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