BDL lends banks

Bulk of funds will be for housing loans

The Central Bank has allocated $1.4 billion to encourage lending to the private sector in 2013. The BDL will extend credit facilities to banks who will offer loans at favorable conditions to private ventures.

The plan intends to support productive sectors, housing schemes, as well as green energy and research and development projects. Loans offered through this scheme will have a long maturity of up to ten years, with a grace period and an interest rate capped at six percent.

The BDL allocated the bulk of funds, around $820 million, for housing loans, including those offered by the Public Housing Corporation and the Housing Bank. It allocated $300 million for funding green energy production and environment-friendly initiatives.

Around $206 million will be used to fund subsidized-interest loans to productive sectors, including $113 million for those guaranteed by Kafalat.

The BDL allocated $15 million for loans to research and development projects, and a similar amount for loans to innovative and entrepreneurial projects.

Banks will be responsible for monitoring the utilization of the loans so as to ensure that they are being used for their specific purposes.

Banks who submit their complete applications to the BDL first will have priority in receiving the allocations. The funds will be distributed once the applications are approved by the BDL.

Banks will repay the initial amount plus a one-percent yearly interest in monthly payments starting February 2014. The repayment period will extend until the maturity of the loans granted by each bank to its customers.

The new lending stimulus is mainly meant to replace the previous BDL-run subsidy scheme, by which banks were granted discounts on their mandatory reserves for some of the loans they offer (mainly for housing and green energy). Many banks have exceeded the maximum usage of their BDL reserves set at 90 percent.