Interbank exchange and settlement systems

Cheques clearing and settlement

Cheques in LBP and in foreign currencies (USD, GBP, and Euro) are cleared through a single system, the BDL Clearing Houses. These are established at the BDL's head office in Beirut and at six of its nine branches, namely in Jounieh, Tripoli, Zahlé, Saida, Tyre and Nabatyeh. All banks on which cheques are drawn (foreign and domestic banks and the BDL itself) should participate in the Clearing Houses and must hold an account with the BDL as per Basic Decisions Nos. 6911 dated 26 February 1998. The costs of operating the Clearing Houses vary and are covered by the participating banks.

Cheques are cleared and settled in the following manner:

(a) At bank level:

	At the end of every working day, each bank tallies all the cheques presented and drawn on other banks;
	The cheques are passed through the reader/sorter and currency codes and amounts are recorded (post-marking);
	Cheques are classified and sorted by currency and by drawee bank;
	The bank prepares a checklist for each other bank specifying the value and number of cheques drawn on that bank, with the corresponding cheques attached to it;
	Another checklist, the control table, is prepared with eight items: the value of cheques to be collected during the clearing session as credit, that of cheques to be paid as debit, the preliminary net credit/debit position. This control table is completed during the second session with the value of the cheques returned to the other banks as credit, the value of the returned cheques received from the other banks as debit, the total credits, the total debits and the final net credit/debit position. Banks' representatives calculate the preliminary and the final net credit/debit positions and confirms them to the Clearing House Officer.
	All the information describing the cheques to be collected from each bank is copied onto a diskette and printed out in the form of a statement.

(b) First and preliminary session:

	The next day the banks' representatives meet at one of the Clearing Houses;
	The staff of the Clearing House receives the diskettes with the attached statement from the representatives, read and copy the information, and book the transactions to the respective banks;
	During this session, the representatives exchange the cheques and the corresponding checklists they have prepared the day before showing the value of the cheques drawn on each of their banks;
	After receiving the afore-mentioned checklist, every representative calculates the value of the cheques drawn on his bank and checks them against that list;
	The staff of the Clearing House hand over a statement for every bank showing its debit position, credit position and net debit/credit position;
	Every position is checked by the representatives to ascertain whether or not it confirms the value calculated in the checklists and to make adjustments for any mistakes;
	Members' net balances are kept and saved in the system until the second and final session;
	Each representative presents the cheques drawn on his bank to his bank for confirmation before funds are withdrawn from customers' accounts. If a cheque is dishonoured for any reason, it will be returned to the sending bank during the second and final session on the next day.

(c) Second and final session

	During this session, only returned cheques are exchanged between banks' representatives following the same procedure as in the first session;
	The account of the sending bank will be debited and that of the bank that refused the cheque will be credited with the amount of the cheque. The BDL records only the net debit/credit position for each bank, and obligations are settled via the accounts held at the BDL
	After the second and final session, account entries and settlement become final and irrevocable. If no returned cheques are exchanged during the second and final session, banks already know their net credit position during the preliminary session, but the value date is that of the final session. Only then are Clearing House balances settled over accounts at the BDL.

According to the Clearing House rules, banks in a net debit position are asked to supply their accounts at BDL with the sufficient funds during a period not exceeding the end of the final session where the debit position must be posted.

Timetable of clearing houses operations

T 0 (LBP & foreign currency cheques)	T + 1 (LBP cheques)	T + 2 (Foreign currency cheques)
Doors open at BCH Opening new session - preliminary.  Arrival of banks' representatives. Delivery of diskettes and printed statements to BCH.  Exchange of cheques.  Treatment of information. Adjustments Confirmation of preliminary net positions. Statement of the new preliminary net positions. Preliminary balances are kept in the system- not posted  End of the session.	Re-opening of the preliminary session - LBP Exchange of returned cheques  Treatment of information.  Adjustments.  Confirmation of final net positions. Statement of the final session.  Posting final positions into the current accounts of the banks. Departure of representatives.  Doors close at BCH	Re-opening of the preliminary session.  Exchange of returned cheques.  Treatment of information.  Adjustments.  Confirmation of final net positions.  Statement of the final session.  Posting final positions into the current accounts of the banks.  Departure of representatives.  Doors close at BCH

Transfers through BDL

Transfers are settled primarily by the BDL over the accounts kept with it by members of the banking and financial sectors. The BDL is the country's major payment system operator, executing payment orders directly over its books and processing nearly all the interbank clearing. The BDL issued Basic Decision No. 6367 dated 9 November 1996 related to the transfer services it offers to account holders at the BDL. Transfers can be made by BDL account-holders from their accounts either to any other account held with the BDL in the same currency or to their own foreign currency accounts held with other institutions abroad (through BDL's correspondent abroad). Payment instructions for local and cross-border transfers, in the domestic and in foreign currencies, are mostly transmitted to the BDL through SWIFT. Transfer instructions in LBP and in foreign currencies for domestic transfers between accounts held with the BDL are executed through the BDL's Current Operations Department. The transfers are processed on a gross basis, mainly in batches during the day, with final settlement at the end of the day. Instructions for same-day value should be received by the Transfers Division of the Current Operations Department before 14:00 on the value date (10.00 on Fridays and Saturdays). Saturday is a business day in this context. The value date of transfers cannot be back-dated. In the event of failure to meet the deadlines, instructions for value that day are cancelled immediately. Instructions are executed provided that both payor's and payee's accounts are in the same currency and that there are sufficient funds on the payor's account. If there are no sufficient funds, the instruction will not be executed and the BDL notifies the payor, who either cancels or covers the instruction. The BDL does not charge commission or fees on transfers of funds between BDL accounts in the same currency.

The future intention of the Current Operations Department is to develop a secure and reliable RTGS system. To this end, the BDL has taken many actions during the last five years and issued related circulars to banks and financial institutions. In this regard, a feasibility study was prepared by a specialized international company regarding the implementation of a secure electronic banking and financial infrastructure which would, among other things, link BDL and the banking and financial sectors electronically and provide the infrastructure for an RTGS system in compliance with the Core Principles for Systemically Important Payment Systems.

Cross-border payments in foreign currencies are processed through the Foreign Exchange and International Operations Department at the BDL. Transfers-in (i.e, from BDL's correspondent abroad to an account held with the BDL) are only executed upon receiving a credit confirmation notice from BDL's correspondent abroad. Transfers-out (i.e, from an account held with BDL domestically to the BDL's correspondent abroad favour the transferor's own account with other institutions - the transferor could be either a bank or financial institution or a public entity) for such transfers, a debit authorisation should be sent before: 

    (a) 15:00 on the value date for USD transfers, and; 

    (b) 24 hours before the value date requested in other foreign currencies transfers.

Other International Payments

International transfers not executed through the BDL are transacted primarily through correspondent banking relationships. The payment instructions are mainly transmitted via SWIFT, and in the case of banks with a foreign presence, through their proprietary networks. 

Retail cross-border payments are effected in all currencies using payment cards and travellers' cheques as well as credit transfers. International payments using credit or debit cards are cleared via the respective card-issuing companies or banks.