Transcript PAYMENT SYSTEMS IN LEBANON BANQUE DU LIBAN (The Central Bank of Lebanon)

PAYMENT SYSTEMS IN LEBANON
BANQUE DU LIBAN
(The Central Bank of Lebanon)
RAMZY HAMADEH
Senior Director
Head of the Current Operations Department
Lebanese Banking/Financial sectors
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Before 1975 regional financial center
1975 -1990 political and economic instability
1990 -1992 transitional period
Since 1993 economic recovery & rebuilding
2002 Final Roadmap for RTGS ( SeBIL)
Ramzy Hamadeh
Manama - March 2005
Payment Systems In Lebanon
Exchange and Payment Systems
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Multi-currency system
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Free exchange rate system
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no restrictions on the purchase or sale of foreign currencies
Free movement of capital
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foreign currencies circulate in the market
no restrictions on flows into or out of the Lebanese markets.
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Manama - March 2005
Payment Systems In Lebanon
Lebanese Banking/Financial Sectors
branches
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Central Bank
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9
Commercial Banks
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799
Med & long term Banks
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10
Financial Institutions
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32
Financial intermediaries
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Money dealers
370
Mutual Funds
962
Leasing Companies
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ATM SWITCHES
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Manama - March 2005
10 - foreign
952 foreign
Payment Systems In Lebanon
Role of Banque Du Liban
Code of Money & Credit
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Issuing notes and coins
Safeguarding the national currency
Providing banking and settlement services
Monitoring and safeguarding the soundness
of the banking sector
Developing the money and financial markets
Maintaining economic stability
Amendment (Law # 133 dated 26/10/99 )
gave power to Banque Du Liban on
different areas related to Payments and
Securities Systems.
Ramzy Hamadeh
Manama - March 2005
Payment Systems In Lebanon
Payment Systems:
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The card networks
The check clearing (CCS)
The Interbank Transfers System (ITS)
The Securities Settlement
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Manama - March 2005
Payment Systems In Lebanon
Clearing and Settlement of Payment Cards
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ATMs
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Must accept all types of cards recognized and listed by
Banque Du Liban
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Must be linked to ATM networks connected to all other
networks for domestic transactions
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Clearing and settlement relating to the use of cards issued
domestically and used in Lebanon should be done
domestically without passing through international
networks.
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Clearing and settlement of POS transactions effected through
international networks
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Clearing and settlement of ATM transactions recently
transferred to BDL
Ramzy Hamadeh
Manama - March 2005
Payment Systems In Lebanon
Clearing and Settlement of Payment Cards
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Procedure:
*1st level : 3 ATM switches in Lebanon clear
interbank transactions
*2nd level: at BDL
a) Settle (debit/credit) banks’ accounts based
on the results of level 1
b) Clearing and settlement of ATM switches
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Ramzy Hamadeh
Manama - March 2005
Payment Systems In Lebanon
Clearing and Settlement of Check
Deffered
Owned
& operated by BDL
Checks
cleared in LBP,USD,GBP & EURO
Clearing
in 6 branches
Instruments:
checks & gov. payments
Participants:
BDL & banks
VD:
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system
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LBP = T+1
FX= T+2
Manama - March 2005
Payment Systems In Lebanon
Clearing and Settlement of Checks
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Management of risks related to the check
clearing:
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Stand alone
Agreements (right of set-off)
Other deposits
Ownership of exchanged checks
Information on rejected checks
Unwind process
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Manama - March 2005
Payment Systems In Lebanon
Clearing and Settlement of Checks
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Ramzy Hamadeh
Future initiatives
 Full automation
 Check imaging
 Online debit / credit
 Charge backs for
returned checks
 Centralized clearing
 Include clearing of
other retail payments
Manama - March 2005
Payment Systems In Lebanon
Interbank Transfer System
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Deferred system
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Owned & operated by BDL
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Payment instructions settled by BDL over the accounts of the
participant members.
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Participants: BDL, banks, financial institutions & public sector
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Value date (VD): same day & future dates
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Use of SWIFT for domestic and cross-border transfers
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SAMA :Introduction of SWIFT Automated Messages Application
to automate data entry for domestic SWIFT messages
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Manama - March 2005
Payment Systems In Lebanon
TRANSFERS
To Other branch/es
Bank A acc
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BDL Branch
Cross boarder
Foreign
Correspondent
Bank A acc
-------------------------------------------------------------------------In the same branch
BDL Beirut
A
instructions
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Bank A (Sub acc)
Bank A (Master acc)
Bank B (Master acc)
Bank C (Master
Bank Dacc)
(Master acc)
Bank E (Master
Bank Facc)
(Master acc)
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Manama - March 2005
Payment Systems In Lebanon
Interbank Transfer System
The Route of a SWIFT Message Directed to COD
IF
From SWIFT members
VD >DD
BIC =
BDLCLBBXCOD
VD=DD
C
O
D
P1
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Ramzy Hamadeh
SWIF
T
UNIT
PC1
Manama - March 2005
Payment Systems In Lebanon
Summery of IMF Assessment
(June 2003)
SIPS
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CORE PRINCIPLES
Check clearing
Transfer system
1-Legal basis
Partly observed
Partly observed
2-Undestanding risks
Observed
Broadly observed
3-Managing risks
Broadly observed
Partly observed
4-Prompt settlement
Observed
Observed
5-Default of net debtor
Partly observed
Partly observed
6-Settlement
Observed
Observed
7-Security & reliability
Observed
Broadly observed
8-Efficiency
Broadly observed
Broadly observed
9-Open access
Observed
Observed
10-Governance
Broadly observed
Broadly observed
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Manama - March 2005
Payment Systems In Lebanon
Organizational Issues
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“COBIT”: Committee on Modern
Banking and Financial Techniques
and Information Technology
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Established March 2001
Capital: 2.8 Billion LBP
Chaired by the First Vice- Governor
Forum for cooperation between
Banque Du Liban, the banking sector
and other private and public entities
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Manama - March 2005
Payment Systems In Lebanon
Organizational Issues
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Objectives:
 Modernizing banking operations and services to
include advanced electronic means of payments
 Issuing circulars to keep pace with
developments in the fields of electronic banking
and financial services
 Establishing an interbank communication
network between Banque Du Liban and the
financial and banking sectors
 Designing training programs for the staff
involved in the implementation of modern
banking and financial techniques
Ramzy Hamadeh
Manama - March 2005
Payment Systems In Lebanon
Securities Settlement System
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Midclear: “Custodian and Clearing Center of financial
instruments for Lebanon and the Middle East”
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Formed as a corporation (Joint-stock company) 1994
Approved as per Law # 139 dated 1999
Majority owned by Banque Du Liban
Custodian for financial instruments
Mandatory for bank shares and listed securities
Clearing and settlement services for financial instruments
Trading by book-entry
Dematerialization of Securities
Brokers communicate orders to the BSE
Transactions transmitted are irrevocable
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Manama - March 2005
Payment Systems In Lebanon
Securities Settlement System(5)
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Ramzy Hamadeh
Manama - March 2005
Payment Systems In Lebanon
E-banking Initiatives
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Banque Du Liban’s head office and its branches linked
electronically
Banks’ head offices linked electronically with all their
branches
E-banking based on norms of transparency and integrity
Requirements before engaging in any e-banking activities:
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Banks and other registered institutions (e.g. Financial inst.)
should give Banque Du Liban prior notification
Other companies offering e-banking services to the public
should acquire a prior authorization from Banque Du Liban’s
Ramzy Hamadeh
Manama - March 2005
Payment Systems In Lebanon
E-Signature Initiatives in Lebanon
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Draft Law amending the Lebanese Code of
Civil Procedure to recognize e-signatures
and admit e-documents as evidence in a
court of law
Public key infrastructure
Characteristics: Confidentiality/Integrity/
Authenticity/Non-repudiation
Banque Du Liban:
Root Certificate authority (CA) for banks
& financial institutions
 Licensing banks as CAs to issue
certificates to clients & other banks
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Manama - March 2005
Payment Systems In Lebanon
Banking System: CA Hierarchy
Root CA/ BDL
CA/Bank x
CA/Bank z
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Manama - March 2005
CA/Bank y
CA/Bank w
Payment Systems In Lebanon
Legal Infrastructure
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Current Legislation
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Code of Money and Credit
Commercial Code
Arab clearinghouse: settle operations between
Arab financial markets as well as other
international markets (1999)
Law # 159(1999) Authorizing the opening of
securities accounts
Law # 520(1996) Developing financial markets and
regulating fiduciary contracts
Law 308(2001) on bank share / bond issuing and
trading
(bank share dematerialization)
Ramzy Hamadeh
Manama - March 2005
Payment Systems In Lebanon
Legal Infrastructure
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BDL decision #8341(2003):
• ATM e-clearing house
BDL decision #7548(2000):
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E-banking
BDL decision #7547(2000):
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Mandatory bank IT network
BDL decision #7299(1999):
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Regulation of ATMs
BDL decision #6367(1996):
• Interbank transfers
BDL decision #6911(1998):
• Check clearinghouse rules
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Manama - March 2005
Payment Systems In Lebanon
Legal Infrastructure
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Relevant draft laws
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Dematerialization of traded instruments
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Netting recognition/Finality of
settlement/Irrevocability/Elimination of Zero-hour
rule
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Securities lending
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Repurchase agreements
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E-signature
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Organization of the Financial Markets and the
creation of a securities regulator
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Manama - March 2005
Payment Systems In Lebanon
Key Elements for a Payment System
Reform
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Define clearly the strengths and the weaknesses of the
actual system and any system planned for the future
Build a supportive legal framework
Ensure enough safety and efficiency to fit participants
and customers’ needs
Evaluate resources costs along with budget and
infrastructure constraints
Ensure continuous review and update of the system
design to keep with economic and technological
advances
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Manama - March 2005
Payment Systems In Lebanon
Recommended
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“NPC” National Payment System Council
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“PSPC” Payment System Policy Committee
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Recommended by the IMF
Formal consultative body
Assist Banque Du Liban in formulating policies to oversee,
promote and develop payment systems
To be implemented in the near future
Recommended by the IMF
Includes all relevant Banque Du Liban departments
Establish Banque Du Liban policy line
To be implemented in the near future
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Manama - March 2005
Payment Systems In Lebanon
SeBIL:
An Ambitious Leapfrog into the future
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Secure Banking and Information for Lebanon: A virtual
private network
Platform for secure payments (Banks, Financial
Institutions, Public Sector)
Increased ability to manage market liquidity & risks
Electronic end-to-end processing at all levels of
interaction
Assured reliability & integrity of strategic information
Electronic Reporting
Web-based Application
Real Time Settlement System
Automated Clearing House
Treasury Management System
Help desk
Ramzy Hamadeh
Manama - March 2005
Payment Systems In Lebanon
SeBIL: Logical Layout
Banks
Financial Institutions
Public Sector
Communications Layer
Application Layer
Infrastructure Layer (SITI)
SeBIL
BDL
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Ramzy Hamadeh
BCC
Manama - March 2005
Payment Systems In Lebanon
B
A
N
K
S
Web based Applications
Common
Communications Cheques
Network
Payment Cards
E-mail
Circular
Report
Transaction
CDR &
UC
Queries
Automated
Clearing House
Clearing
Permission
Requiring
Transaction
Treasury
DvP
EvP
Government
Bonds
Registry
Treasury Management
Solution
Electronic Reporting
Legacy
System
Data Repository
Help Desk
Data Warehouse
BDL
Ramzy Hamadeh
Real Time
Settlement
System
Direct Money Transfer
Reporting
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RTSS
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BCC
Payment Systems In Lebanon
Application Layer: Logical Architecture for Transactions
BDL
branches
Banks
SWIFT
node
web server
application server
landing zone
mailboxes
clearing
house
treasury
dealing
data
warehouse
(DSS)
middleware
RTSS
host
host db
data
repository
workflow
workflow
helpdesk
desk
help
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Ramzy Hamadeh
Manama - March 2005
Payment Systems In Lebanon
Application Layer: Logical Architecture for Reporting
banks
web
server
mail
server
BDL
branches
external
data
landing zone mailboxes
Staging Area
Verify & Load
Data Repository
application
server
data
warehouse
(DSS)
middleware
host
hostdb
workflow
help desk
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Manama - March 2005
Payment Systems In Lebanon
Real-Time Settlement Systems Process Flow
Government
Bonds Registry
BDL
General Ledger
RTSS
Large value
Transactions
Dealing/
Domestic
Network
Checks
Swift /
Domestic
Network
Settlement
Automated
Clearing
House
Cards
Payments
Visa &
Master Card
Clearing
Midclear
BDL
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Government
Ramzy Hamadeh
Banks
Manama - March 2005
Stock
exchange
Payment Systems In Lebanon
More on
PAYMENT SYSTEMS
IN LEBANON
@
www.bdl.gov.lb
Banque Du Liban
( central bank of Lebanon )
• BIS Red Book - 1998
• BIS Red Book - 2003
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Ramzy Hamadeh
Manama - March 2005
Payment Systems In Lebanon
Ramzy Hamadeh
[email protected]
Fax : + 961(1) 750 420 - Tel: + 961(1) 343 317
Mobile : + 961(3) 600 619
P.O.Box : 11 - 5544
BEIRUT – LEBANON
Banque Du Liban
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Ramzy Hamadeh
Manama - March 2005
Payment Systems In Lebanon