On April 22, 2020, the Central Bank of Lebanon issued a new circular amending the provisions pertaining to the facilities that may be granted by the Central Bank to commercial banks and financial institutions.

The new circular provides that commercial banks and financial institutions shall grant “exceptional loans” in both Lebanese pounds and US dollars to borrowers who cannot repay loan installments due in March, April, May and June because of the current events.

Here are the main features of the Circular:

• These loans shall be granted to settle the installments of previous loans and/or for settling salaries or covering productive or operational needs of businesses.
• These loans shall be granted without interest rate for a period of five years with a free prepayment option.
• These loans cannot be granted to businesses that were not subject to lockdown measures unless they are able to demonstrate that they cannot repay loan installments because of the current events.
• These loans are to be repaid in the currency in which they are denominated.
• These loans can be granted to customers who did not borrow any money from their bank or financial institution provided that their financial situation has deteriorated because of the current events.
• The Circular prohibits Banks and Financial institutions from applying penalties and fines on overdue payments.
• The facilities granted by the Central Bank of Lebanon are to be calculated in accordance with an “Average” currency exchange rate.
• Each bank or financial institution shall be responsible of ensuring compliance with the provisions of the Circular.