Our source has exclusively obtained circulars from the Central Bank of Libya addressed to banks, aimed at ensuring the stability and strengthening the resilience of the banking sector, particularly in terms of influencing the volume, type, and duration of credit and financing, in a way that meets the actual needs of economic activity in production and services.
The instructions state that the maximum allowable expansion in the size of the credit portfolio – the financing and investment portfolio – for the financial year 2025 shall not exceed 7% of the bank’s existing portfolio balance. Furthermore, banks must adhere to the instructions when granting credit and financing, which must be based on a thorough study of the client and the associated risks, and must include all the requirements stipulated by the Central Bank of Libya.
It is also necessary to review, update, and develop credit/financing and investment policies, as well as related risk management policies, to keep pace with market changes and economic conditions. These policies must at least meet the minimum requirements set by the Central Bank of Libya.
Banks must also manage the credit/financing and investment portfolio in a way that reduces the ratio of non-performing loans and limits individual and sectoral concentration. The portfolio should be diversified by setting limits to address concentration risks across various levels and activities.
Periodic review and updating of standards and conditions related to granting credit and financing must be conducted whenever necessary, in order to avoid any future risks to the banks.
In addition, efforts must be made to train and qualify staff in managing credit/financing and investment portfolios, and in applying best practices in risk management, by enrolling them in certified and specialized training programs to enhance their competencies.
