The Central Bank of Libya (CBL) has introduced a new initiative aimed at alleviating the country’s ongoing liquidity crisis while embracing the modern financial era. Through this pioneering program, commercial banks are now authorized to offer interest-free loans for electronic purchases, providing much-needed support to salaried customers who struggle with accessing cash. Detailed in Circular No. 20, drafted by the Banking and Currency Control Department, the initiative permits credit limits of up to 60 percent of customers’ net salaries. These interest-free loans are offered for electronic transactions conducted using existing banking platforms, consolidating the country’s push towards digital payments.
How the Program Works
Operating under the Islamic banking principle known as "Qard Al-Hassan," the interest-free loan program is tailored for salaried individuals who face difficulties in accessing physical cash. This principle allows the extension of interest-free credit, strictly adhering to the tenets of Islamic finance which prohibit the earning of interest from loans. By facilitating electronic transactions through digital services like online banking and electronic payment systems, the CBL effectively targets and mitigates cash flow issues faced by Libyan citizens. Commercial banks licensed in Libya are required to comply with these new guidelines. This ensures a uniform approach across the banking sector towards promoting digital solutions while remaining faithful to Islamic banking principles.
Broader Implications for Libya’s Financial Landscape
The Central Bank of Libya (CBL) has launched a groundbreaking initiative to address the ongoing liquidity crisis in the country while adapting to the modern financial age. This innovative program allows commercial banks to extend interest-free loans for electronic purchases, which is a significant benefit for salaried individuals who face difficulties in accessing cash. According to Circular No. 20, developed by the Banking and Currency Control Department, the initiative sets a credit limit of up to 60 percent of the net salaries of eligible customers. These interest-free loans are designed for electronic transactions carried out through existing banking platforms, reinforcing Libya’s commitment to advancing digital payments. This move aims to not only alleviate the immediate cash flow issues but also to integrate more advanced financial practices into the daily lives of Libyans, ensuring that the population benefits from modern banking technologies while navigating the liquidity challenges.