701 Lebanon Banking Industry

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A

Global Country Study Report

On

Banking Industry of Lebanon

Business Opportunities for Gujarat / India

Submitted to

701 Ahmedabad Institute of Technology

Under the Guidance of

Prof. Priyanka Kansara

(Asst. Prof. MBA Department)

In partial Fulfillment of the Requirement of the award of the degree of

Master of Business Administration (MBA)

Offered By

Gujarat Technological University

Ahmedabad

Prepared by:

Students of

MBA Semester - IV

Group No. 3

May 2014


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Plagiarism ReportD i g i t a l s i g n e d

Author:Processing date: Sun, 27.4.2014 8:27:19 CEST

A total of922 fragments were analysed. As a result 87 fragments (9.4%) were found in otherdocuments. In the document preview below the fragments are marked light blue and clickable.

Cross reference documents

Following list of found documents is grouped by document titles and ordered by found fragements.With a mouseclick on "x fragments" the relevant fragments in the document are colored blueand thewindow scrolls to the first location. Click on " x fragments" again resets the special marks.

25 fragments were found in a text with the title: "Banque du Liban", located on:http://en.wikipedia.org/wiki/Banque_du_Liban

15 fragments were found in a text with the title: "HDFC Bank", located on:http://en.wikipedia.org/wiki/HDFC_Bank

9 fragments were found in a text with the title: "Rayleigh Distribution Definition", located on:http://www.imd.gov.in/doc/pro_sci_tech.pdfhttp://gjs.mofcom.gov.cn/accessory/200808/1218790225146.dochttp://www.eclac.org/publicaciones/xml/0/14030/lcg2200i.pdfhttp://www.accaglobal.com/pdfs/ACCA_CGA_CPA.pdf

http://www.escwa.un.org/information/publications/edit/upload/ictd-05-3.pdfhttp://www.moneycontrol.com/news_html_files/pdffiles/aug2010/betuldraft.pdfhttp://www.fincen.gov/statutes_regs/guidance/pdf/msb_prevention_guide.pdfhttp://www.hds.com/assets/pdf/hitachi-storage-solutions-at-hdfc-bank-limited.pdfhttp://www.redcea.org/PublicDocuments/Guia-EE/Esp/Guia-EE-PKO-Esp.pdf

5 fragments were found in a text with the title: "Market analysis of Arivia.kom", located on:http://uir.unisa.ac.za/xmlui/bitstream/handle/10500/1895/00dissertation.pdf?sequence=1

3 fragments were found in a text with the title: "Confessionalism /Confessionalism.pdf", located on:http://rudar.ruc.dk/bitstream/1800/3168/1/Confessionalism.pdf

2 fragments were found in a text with the title: "What kind of future for the Port of Beirut", locatedon:http://dspace.mit.edu/bitstream/handle/1721.1/47916/51875872.pdf?sequence=1

1 fragment found in a text with the title: "Populism and Neopopulism in Latin America: Clientelism,Trade Union Organisation and Electoral Support in Mexico and Argentina in the '90s", located on:http://ageconsearch.umn.edu/bitstream/9336/1/wp070041.pdf

1 fragment found in a text with the title: "An empirical analysis of Economics and Management",located on:http://openarchive.cbs.dk:80/bitstream/handle/10398/7993/sta_Dis_ladttir.pdf?sequence=

1


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1 fragment found in a text with the title: "Publications Division Editing:", located on:http://publicationsdivision.nic.in/others/india_2007.pdf

1 fragment found in a text with the title: "Impact Of ATM On Customer Satisfaction (A ComparativeStudy of SBI, ICICI & HDFC bank)", located on:http://www.saycocorporativo.com/saycoUK/BIJ/journal/Vol2No2/article2.pdf

1 fragment found in a text with the title: "Mijat Sabljar's genealogical notes concerning his family",located on:http://hrcak.srce.hr/file/39894

1 fragment found in a text with the title: "Wikipedia:Articles for creation/2008-02-11", located on:http://en.wikipedia.org/wiki/Wikipedia:Articles_for_creation/2008-02-11

1 fragment found in a text with the title: "Bulgaria and the European Economic and MonetaryUnion", located on:http://pdc.ceu.hu/archive/00002114/01/LenaRoussenovaEN.pdf

1 fragment found in a text with the title: "Globalization, labor markets and inequality in India",located on:http://idl-bnc.idrc.ca/dspace/bitstream/10625/35058/1/127130.pdf

1 fragment found in a text with the title: "The Neoliberal Myth in Latin America: The Cases ofMexico and Argentina in the 90s", located on:http://www.feem.it/userfiles/attach/Publication/NDL2007/NDL2007-042.pdf

1 fragment found in a text with the title: "Family business investor byouts: the Italian case", locatedon:http://www.decon.unipd.it/assets/pdf/wp/20050004.pdf

1 fragment found in a text with the title: "Knowledge Transfer through Narratives in anOrganization", located on:http://scholar.lib.vt.edu/theses/available/etd-02222007-204522/unrestricted/Limon.pdf

1 fragment found in a text with the title: "TERRORISM AND HOMELAND SECURITYTRANSPORTATION AND INFRASTRUCTURE", located on:http://www.rand.org/pubs/monographs/2004/RAND_MG246.pdf

1 fragment found in a text with the title: "AND TRINIDAD AND TOBAGO TABLE OFCONTENTS", located on:

http://www.eclac.cl/publicaciones/xml/0/10000/carg0576.pdf

1 fragment found in a text with the title: "ICPS Newsletter. 169 (December 9) New adapted law aimedfighting illegal money laundering: good news or bad news?", located on:http://pdc.ceu.hu/archive/00005730/01/nl_eng_20021209_0169.pdf

1 fragment found in a text with the title: "Affairs /femip_study_private_sector_syria_en.pdf", locatedon:http://www.eib.org/attachments/country/femip_study_private_sector_syria_en.pdf

1 fragment found in a text with the title: "Changes in Metallothionein Level in Rat Hepatic Tissueafter Administration of Natural Mouldy Wheat", located on:

http://www.mdpi.com/1422-0067/10/3/1138/pdf


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1 fragment found in a text with the title: "Technology and non-technology shocks in a two-sectoreconomy.", located on:http://www.isae.it/Working_Papers/WP_96_2008_Busato_Girardi_Argentiero.pdf

1 fragment found in a text with the title: "Mass drug administration", located on:http://en.wikipedia.org/wiki/Mass_drug_administration

1 fragment found in a text with the title: "Global poverty and inequality : a review of the evidence",located on:http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2008/05/19/000158349_20080519142850/Rendered/PDF/wps4623.pdf

1 fragment found in a text with the title: "A History of Pantomime", located on:http://www.gutenberg.org/dirs/1/3/4/6/13469/13469-8.txt

1 fragment found in a text with the title: "Em busca dos determinantes do declnio da economia

Argentina no perodo 1975-2001 /", located on:http://dspace.c3sl.ufpr.br:8080/dspace/bitstream/1884/2606/1/Isnardo R. da Silva - Em Buscados Determinantes do Declnio.pdf

1 fragment found in a text with the title: "Riad Salameh", located on:http://en.wikipedia.org/wiki/Riad_Salameh

1 fragment found in a text with the title: "The effects of welfare reform and related policies on singlemothers' welfare use and employment", located on:http://www.federalreserve.gov/pubs/feds/2005/200545/200545pap.pdf

1 fragment found in a text with the title: "The OECD Anti-Bribery Convention Ten Years On",located on:http://epubs.surrey.ac.uk/578/1/fulltext.pdf

1 fragment found in a text with the title: "The global trend of health care restructuring: The cases ofAlberta, Canada and Ghana, West Africa", located on:https://dspace.ucalgary.ca/bitstream/1880/24989/1/47939Dunham.pdf

1 fragment found in a text with the title: "Essays on sovereign debt and international capital flows",located on:http://dspace.mit.edu/bitstream/handle/1721.1/49711/436454479.pdf?sequence=1

1 fragment found in a text with the title: "Soviet ruble", located on:http://en.wikipedia.org/wiki/Soviet_ruble

1 fragment found in a text with the title: "Who Decides on Public Expenditures? A Political EconomyAnalysis of the Budget Process: The Case of Argentina", located on:http://129.3.20.41/eps/pe/papers/0511/0511004.pdf

1 fragment found in a text with the title: "Patrimonial capitalism : Economic reform and economicorder in the Arab world", located on:http://tobias-lib.uni-tuebingen.de/volltexte/2005/1947/pdf/complete.pdf

1 fragment found in a text with the title: "The Environmental Audit Committee", located on:

http://www.publications.parliament.uk/pa/cm200607/cmselect/cmenvaud/331/331.pdf


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1 fragment found in a text with the title: "Revised tuna management plan: a national policy for themanagement of Vanuatu tuna fisheries", located on:http://www.spc.int/DigitalLibrary/Doc/FAME/Reports/Anon_2009_VanuatuTunaManagementPlan.pdf

1 fragment found in a text with the title: "Turkey and the European Union: the implications of aspecific enlargement. Egmont European Affairs Paper, April 2006", located on:http://aei.pitt.edu/9307/01/050404Turquie-ALM-BVP.pdfhttp://www.egmontinstitute.be/papers/050404Turquie-ALM-BVP.pdf

1 fragment found in a text with the title: "The Midwestern Archivist, Volume 18, Number 2, 1993",located on:http://minds.wisconsin.edu/bitstream/handle/1793/43705/Vol. 18, no. 2.pdf?sequence=1

1 fragment found in a text with the title: "The human impact on climate : new evidence fromobservations", located on:http://user.uni-

frankfurt.de/~grieser/publications/publications_pdf/Rurality_in_West_Africa_final.pdf

1 fragment found in a text with the title: "Stochastic processes and antiderivational equations on non-Archimedean manifolds", located on:http://downloads.hindawi.com/journals/ijmms/2004/983679.pdf

1 fragment found in a text with the title: "Makoto Nakajima", located on:http://en.wikipedia.org/wiki/Makoto_Nakajima

1 fragment found in a text with the title: "COMPETITION COMMITTEE REGULATING MARKETACTIVITIES BY PUBLIC SECTOR", located on:http://www.oecd.org/dataoecd/61/5/34305974.pdf

1 fragment found in a text with the title: "Citizen intellectuals and philosopher-kings, the dilemmas ofdissidence in east-central Europe, 1968-1989", located on:http://www.collectionscanada.gc.ca/obj/s4/f2/dsk1/tape9/PQDD_0025/NQ39264.pdf

1 fragment found in a text with the title: "The corporate bond market in Thailand", located on:http://www.bis.org/publ/bppdf/bispap26t.pdf

1 fragment found in a text with the title: "Big Cuts, Little Time: Welfare State Retrenchment inSweden, CES Working Paper, no. 128, 2005", located on:http://www.ces.fas.harvard.edu/publications/docs/pdfs/Dahlstrom.pdf

http://aei.pitt.edu/9127/01/Dahlstrom.pdf

1 fragment found in a text with the title: "Line antiderivations over local fields and theirapplications", located on:http://downloads.hindawi.com/journals/ijmms/2005/678131.pdf

1 fragment found in a text with the title: "Euroregions in Bosnia and Herzegovina", located on:http://www-sre.wu-wien.ac.at/ersa/ersaconfs/ersa06/papers/70.pdf

1 fragment found in a text with the title: "Opportuning Virtue: Lessons of the Louisiana MarriageLaw", located on:http://dspace.wrlc.org/bitstream/1961/590/1/etzioni-opportuning-1997.pdf


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1 fragment found in a text with the title: "North Carolina Register", located on:http://www.oah.state.nc.us/rules/register/Volume17Issue15.pdfhttp://www.oah.state.nc.us/rules/register/Volume17Issue06.pdf

1 fragment found in a text with the title: "Nuclear arms control negotiation with special reference toNew Zealand and the comprehensive Test Ban Treaty", located on:http://researchspace.auckland.ac.nz/bitstream/handle/2292/2274/02Whole.pdf?sequence=2

1 fragment found in a text with the title: "The modifiable areal unit phenomenon: an investigationinto the scale effect using UK census data", located on:https://research-repository.st-andrews.ac.uk/bitstream/10023/465/6/Manley_phd_thesis.pdf

1 fragment found in a text with the title: "NRC Regulations Title 10, Code of Federal Regulations",located on:http://www.nrc.gov/reading-rm/doc-collections/cfr/cfr-title-10.zip

1 fragment found in a text with the title: "Nature of Changes", located on:

http://www.federalreserve.gov/boarddocs/supmanual/trading/trading.pdf

1 fragment found in a text with the title: "George W. Bush", located on:http://en.wikipedia.org/wiki/George_W._Bush

1 fragment found in a text with the title: "Islamist Revivalism and Western Ideologies", located on:http://hwj.oxfordjournals.org/content/32/1/44.full.pdf

1 fragment found in a text with the title: "Supply Network Management in Emerging Markets",located on:http://gupea.ub.gu.se/bitstream/2077/2380/1/gbs_thesis_2002_6.pdf

1 fragment found in a text with the title: "The motivation for base holding company acquisitions",located on:http://www.richmondfed.org/publications/research/working_papers/1976/pdf/wp76-2.pdf


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PREFACE

As part of the curriculum of Gujarat Technological University, The students are

required to prepare Global Country Report in addition to their theoretical study so as

to enable them to have the knowledge of the practical aspect of the global business

management.

As one of the philosopher has rightly said that One can learn only through ones

experience, hold true here. As the things are done practically, it fills the gap between

the theoretical knowledge and its application in practical life. Thus the objective

behind preparing this project is to relate the management subjects taught in theclassroom to its practical application in the Global World. Our work in this project, is,

therefore a humble attempt towards this end.

The project work is required to be undertaken where we got the opportunity to know

about the real information about Banking Industry of Lebanon Country, altogether

different from theory of International Business. It covers MICRO ANALYSIS:

Banking Industry. Analysis of Banking Industrys Challenges, Winning the Business

Strategy Game, and Projections for Export-Import Trade and Investment between the

Lebanon & INDIA/GUJARAT.


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ACKNOWLEDGEMENT

Global Country Report is a golden opportunity for learning practical aspect of GlobalBusiness. The Global Country Report is a base for every post graduate student to

learn the emerging era of global environment and international changes. It provides

the opportunity to bridge the gap between the practical and theoretical studies. Hence

is a free source to acquire knowledge regarding business environment.

We would like to thank Mr. Mayank Bhatia (HOD-MBA DEP.) for giving us

opportunity to prepare Global Country Report to acquire practical knowledge of

Global Business.

We wish to express our deep sense of gratitude to Prof. Priyanka Kansara (Asst

Professor-MBA DEP) for his guidance and useful suggestions, which helped us in

completing the project work, in time.

Finally, yet importantly, we would like to express my heartfelt thanks to Librarian

staff as well as the computer lab staff for their sincere appreciation and help.


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Contents

SUMMARY OF PART I .............................................................................................12

SUMMRY OF PARTII............................................................................................21

INTRODUCTION OF THE SELECTED COMPANY ..............................................27

BANQUE DU LIBAN: ............................................................................................28

THE ASSOCIATION OF BANKS IN LEBANON (ABL).....................................32

INTRODUCTION OF HDFC .....................................................................................52

SWOT ANALYSIS OF HDFC................................................................................55

MAIN BANKING & FINANCIAL REGULATIONS OF LEBNON BANKINGINDUSTRY .................................................................................................................57

SWOT ANALYSIS FOR LEBANESE COMMERCIAL BANKS.............................64

MARKET OPPORTUNITIES FOR INVESTMENT IN SELECTED COUNTRY:LEBANON ..................................................................................................................67

WINNING STRATEGY OF THE COMPANY..........................................................79

FUTURE PROJECTIONS OF TRADE (EXPORT - IMPORT) OF THE COMPANY/ FIRMS PRODUCTS OR SERVICES WITH SELECTED COUNTRY /

PROVINCE / STATE DURINGNEXT3 TO 5 YEARS ............................................82

POLICIES AND NORMS OF INDIA FOR LICENSING..........................................89

CONCLUSION IN TERMS OF PROPOSED BUSINESS PLAN / MODEL/

BUSINESS STRATEGIES........................................................................................106FINDINGS AND SUGGETIONS:............................................................................120

CONCLUSION:.........................................................................................................123

SOURCES OF INFORMATION ................................Error! Bookmark not defined.

BIBLIOGRAPHY......................................................................................................130


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SUMMARY OF PART I


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INTRODUCTION ABOUT THE LEBANON:

We have summarizes the basic introductory information regarding Lebanon infollowing table:

Country The Republic of LebanonArea Total: 10400 Sq. Km

Land: 10230 Sq. Km

Geographical Location At South West Asia, on the eastern shore

of the Mediterranean Sea.

Capital Beirut

President Michel Suleiman

Prime Minister Najib MikatiPopulation 48,22,000 (Estimate of 2008)

Establishment Day 1 September 1925

Constitution 23 May 1926

Independence Declared 8 November 1943

Independence Recognized by France 22 November 1943

Gross Domestic Product (GDP) $61.444 billion (Estimate of 2011)

Per Capita Income $15.522 (Estimate of 2011)Currency Lebanese Pound

Time Zone EET

Major Language Arabic

Major Religions Islam and Christianity

Life Expectancy 71 years (Men) and 75 years (Women)

(UN)


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BACKGROUND:

Lebanon has made progress in his recovery from the political authorities in 1991 andended a devastating 15 - year civil war. According to the Taif - plan of nationalreconciliation - the Lebanese have established a more equal distribution of political

system, particularly by giving Muslims more involved in the political process toestablish the religious divisions in the government.

Since the end of the war in Lebanon has had several successful elections, most of themilitia weakened or disbanded , and the Lebanese Armed Forces (LAF ) to extendcentral government authority , more than two -thirds of the country . Hezbollah, aradical Shiite organization, retains its weapons.

During the civil war in Lebanon , the Arab League legitimized Syrian troops Taifdeployment, numbering about 16,000 based mainly east of Beirut and in the Bekaa

Valley. Damascus justifies its continued military presence in Lebanon in Beirutshowing requests and the Lebanese governments failure to implement the

constitutional reforms if Accord. Israels withdrawal from southern Lebanon in

May 2000, however, that some Lebanese groups to demand that Syria withdraw itsforces as well. The adoption of Resolution 1559 - October 2004 at the beginning of aresolution calling for Syria to withdraw from Lebanon and stop interfering inLebanese affairs - more courage to oppose the Syrian -Lebanese group presence inLebanon.

Unlike most of the desert state of Lebanon - Lebanon when it effects thousands ofyears of civilization in Lebanon, including the neighbors, reached its peak in the 20thcentury, the success of the region, economically free countries, and the most

civilized and democratic " is.

But it will not last very long. Home of the Arab - Israeli war on Lebanon was a waryou want to move downward. Syrian, Palestinian, and Israeli defense forces are verysmall, as a neutral country, since 1970, the district has moved at lightning LebanonWar. In some countries, Syria, Iran, Israel, Libya and the Palestinian guerrillas in theircountry, that is not trying to replace the weapons of war, and the sponsorship money

funneled to Lebanon. Massive destruction and hundreds of casualties (mostlycivilians, Lebanon) occurred thousands Lebanon. Syria, Jordan, Egypt, Israel and thePalestinian territories: a relatively small events in neighboring countries at all times.Lebanon has been produced in several resolutions of the Security Council, missed, butmost of them will never be realized.


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BASIC INTRODUCTION ABOUT THE BANKING INDUSTRY OF

LABANON:

Banking sector of Lebanon has relatively high level of success in recent years hascaptured international attention. All International media outlets have praised Lebanon

for being one of very few countries continuing to report growth since the financial

crash of 2008. The Lebanese banking sector proved largely immune from the 2008

financial meltdown that caused the collapse of many financial institutions around the

world. This is because Lebanese banks have years of experience operating in an

unstable and risky political environment, the panelists explained. As a result,

Lebanese banks have long embraced conservative banking policies. For example,

banks must have at least 30 percent of their assets in cash.

Due the civil war 1975-1990, Lebanons economy was highly damaged and because

of its economic instability national output but by half, its position in West Asian

banking hub was became instable.

It was a highly instable economy and government was trying to make it stable by

collecting taxes and regain access to some key aspects of the economy like, port,

services by various governmental departments, etc. Banking sector was the only one

sector which can provides the required money to the various needed organization in

the form of loan or any other forms.

Recovery of Lebanons economy has been helped by sound banking system as well as

strong financial institutions, some of the family remittances, small and medium scale

manufactures and some of the international aid in terms of foreign exchange.


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IMPORTANT ELEMENTS FROM THE STEEPLED ANALYSIS OF

LEBANON WHICH RELATES TO THE BANKING INDUSTRY:

Lebanon, 300 days a year of sun, cold rain, moderate springs, hot and regular autumnclimate is Mediterranean with an average of four seasons.

Snowy winter in mountains and on the coast, the beach is hot and summer, but it'scold in the mountains. Lebanon is the only country in the Middle East is not the desert

If we considered the population of the country than it would not be so much attractivein terms of banking industry. Because the majority part of this population is ofMuslims who are not so much interested in the activities of banking and investment,as their religion has some restriction to do so. Now if we look at the banking industrythan it would only be run efficiently if there is huge amount investment and depositscan be made in large amount otherwise it would be very difficult for any bank to

retrieve.

By considering the education level of the people of Lebanon it is very clears that theyare able to understand the various investment schemes and some of the importantbanking terms.

Lebanon has tried to maximize all the banking system by fully technological enabledinstruments. All banks are trying to link all the branches through online banking sotheir time would be saved and limited resources are required.

The important thing is the way in which all the banks were implemented thetechnology. Rather than the implementation by themselves, to purchase whole systemthey have only implement in some of the branches only. After the successfulimplementation of that technology they have moved from the other branches.

Because of the civil war all the infrastructure were totally broken down so it wasnecessary for all banks to implement the new infrastructure and not only new systemwere enough for the development the necessary thing was technologicalimprovement. So that was a challenging task for the Lebanese banks to create aninfrastructure which is enabled with the technological advancement.


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SUMMARY OF INDIAN BANKING INDUSTRY FROM THE SETTPLED

ANALYSIS:

Indian banking industry works as an intermediary for individuals, financial institution,

the government and other stakeholders. In 2011-12 banking industry affected by

deteriorating asset quality due to that gross non-performing asset of bank registering

high increment in different sector like aviation, infrastructure, power, etc. Banking

industry made a strong economic growth by way of changing me n banking regulation

and increasing in competition from foreign banks, use of multiple channel and

technology, strong regulatory framework, strong customer oriented banking services.

For the last 2-3 year domestic inflation is high and the value of rupee also decline still

India performing well. Indian economy ranked 10 th in the world at $1.8 trillion of

GDP and it will be estimated that 8 th and $2.3 trillion respectively. Indian finance

sector also contributed 7% to Indias GDP in 2010. Indian finance sector worked

under three main sectors like organized sector, unorganized sector, semi organized

sector. Banking system is mainly work on technology, Laws, creditors right and

corporate governance. India is mostly depending on agriculture. It improves the

economy when the agriculture harvests will good and public deposits their money in

bank. It helps the bank capital creation. But around 40% of Indian people are not

aware about any financial services. Its an opportunity for the banking industry to

open more branches. Currently banks spend 15%of the total expenditure spent on

technology. In last period of 10 year, total mortgages grown from 1.5% to 10% of

total bank advances and loans. In FY2012, Indian bank have done restructuring of

loan. Most of the restructuring done in power sector. The portfolio of restructured

loan is expected to touch Rs. 3.25 lakh cores in 2013.

In early 1990s, in India, there was restriction on foreign investment. For improving

the economy, Indian government introduces the liberalization under condition ofextreme necessity. It increases trade to GDP ratio from 15% to 35% of GDP between1990 and 2005. Around 1990-91 in India foreign banks account was around 8% oftotal asset of banking system. Because of the current account deficit and external debt,India needs to reform the financial sector. Then India creates a competitiveenvironment to maintain a market share. Indian government allow foreign bank fordoing a business in India but only few bank follow the process of global merger. InIndia political instability affects the economy and also disturbs the flow of foreigndirect investment. Now Indian government made a bilateral agreement with 49countries out of the 58 countries. Its an opportunity for other countries to do theirbusiness in India.


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Lebanon is a part of the WTO, UN, and O.I.C. of doing a business with other country.It also makes a bilateral trade with EU and it increases the average annual growth13.6%. In the last six year there was political instability which affects the variouseconomic factors and reduces the 5% of GDP per capita. Now a day all the thing are

running well in Lebanon for doing a business and its an opportunity for the othercountry to do business in Lebanon because it is a member of many internationalorganization and also signed economic and trade co-operation agreement with Araband Eastern Europe countries and EU. Because of the international trade there aremany competition arises. So Lebanon governments pass a competition law to protectthe consumer interest.

As per the analyzed information we can say that customers are becoming aware about

various environmental issues and the hazardous effects of rapid industrialization, and

it is necessary for organizations to attain and sustainable competitive advantage by

creating eco-friendly projects. Banks can project themselves as a socially and

ethically oriented organization by decreasing the loans merely to those organizations,

which has environmental concerns. For social banks, the responsibility for the whole of

society is the most important measure for a good lending practice and is more important

than profit alone. Apart from this, the concept of Globalization and Liberalization has

been governing the world market. We have integrated ourselves with the world economy

by adopting the respective concepts. In this scenario, it is right time to focus on the social

and ethical issues in Banking Industry.


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LEBANON AND INDIA: BUSINESS POTENTIAL FOR BANKING

INDUSTRY

FREE ZONE INVESTMENT

The free zone is a part of the national territory of Lebanon. But it has a special

treatment in terms of customs duties. This allows much greater freedom in transaction

and exchanges, aimed at increasing economic growth and attracting foreign direct

investment. So it would be easy to deal with banking transaction between India and

Lebanon.

SPECIAL ECONOMIC ZONES

Though special economic zones would not be related directly with the banking

industry but the firm who want to establish their industries in this area would be in

requirement of the finance, so at that time banking industry would be considered so it

is important to know that what is the application of SEZs and some important fact

related to that.

Law 83/2002, concerning special economic zones (SEZs), seeks to establish economic

zones that benefit from considerable autonomy and a bureacury-free environmentexport based in SEz are granted Lebanon certificate of foreign usable under

international trade agreements. The law provides for a 10% tax rate and a 5% labour

tax, as well as exemption from sale taxes and custom duties. The tax rate applicable

on all activities within the special economic zones is 10%.

LOCAL INVESTEMENT ATTRECTIVENESS.

If we specifically talked about the banking industry than the most valuable factors thatwould be considered by the any new bank would be the how attractive the Investment

is. If local investing policies are liberalize than it would be very easy for any bank to

get more investment.

The business environment in Lebanon has continued to improve, and both domestic

and foreign investments have gained momentum. Net FDI inflows increased from

USD 6.1Bn in FY 2005/06 to USD 11.1Bn in FY 2007. This surge in investment has

been underpinned significant reforms over the past five years.


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GOOD ECONOMICAL RELATIONSHIP BETWEEN THE COUTNRY.

India and Lebanon enjoy cordial and friendly relation based on many

complementarities such as political system based on parliamentary democracy, non-

alignment, human rights etc.

India establish diplomatic relation with Lebanon in 1954 and maintained its

diplomatic reprehensive in Beirut thought the civil war expect for a brief closure of

about two month from august 5 to October 16, 1989.

So by looking at the economic relationship between Lebanon and India it would not

be so much tough to build up a strong relationship in terms of banking industry.

GDP RATE AND INFLATION RATE.

Real GDP growth is estimated to have slowed from 7.5 percent in 2010 to 1.5 percent

in 2011, according to IMF forecasts that growth could reach around two percent in

2011, which is in line with banque du liban's (BDl) estimates the BDL project real

GDP growth could reach four percent in 2012, with six percent inflation (versus four

percent in 2011).


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SUMMRY OF PARTII


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After that our previous study we have decided to start a new Bank in lebanon.

Banque-Du-Liban and Association of Banks of Lebanon are the two major

dominating authorities in banking industry in Lebanon.

The Banque du Liban was established by the Code of Money and Credit promulgatedon the 1st of August 1963, by Decree no. 13513. It started to operate effectively on1st April, 1964. BDL is a legal public entity enjoying financial and administrativeautonomy. It is not subject to the administrative and management rules and controlsapplicable to the public sector. Its capital is totally appropriated by the State. TheBDL controls bank liquidity by adjusting discount rates, by intervening in the openmarket, as well as by determining credit facilities to banks and financial institutions. Itregulates banks' credit in terms of volume and types of credit, by imposing creditceiling, by directing credits towards specific purposes or sectors and setting the termsand regulations governing credits in general.The BDL grants licenses for the

establishment of banks, financial institutions, brokerage firms, money dealers, foreignbanks, leasing companies and mutual funds in Lebanon. The Banking ControlCommission controls and supervises these institutions. Conferring with theAssociation of Banks, the BDL issues circulars and resolutions governing therelations of banks with their customers.

The Association of Banks in Lebanon was founded in 1959, by virtue of License No1643, dated October 6, 1959. By virtue of the bylaws, every bank enlisted in the list ofbanks set up by the Banque du Liban (Central Bank) has the right to join theAssociation as an active member, upon its request. dMoreover, the representativeoffices of foreign banks may adhere to the Association, as Associate members, onequal footing with the member banks in rights and obligations. However, they do nothave the right to vote or to be candidate for the membership of the Board of Directors.At the beginning of the sixties of the last century, the Association located itsheadquarters in Tabet Building overlooking Riyad Al Solh Square and the BanksStreet. It then moved, in 1982, to Macarri Center located on Burj Hammoud Dorahighroad. At the beginning of July 2001, it moved to its new headquarters in Al Saifiarea, at the intersection between Gouraud Street and George Haddad Street, to a ten-floor building (out of which 4 underground floors), the overall surface of which 3762

square meters, with offices extending over 2241 square meters. As for the overall costof the headquarters, it amounted to 6 million USD.

Since mid-2010, the Lebanese economy witnessed a slowdown in activity as theannual GDP growth rate declined from an average of 8% during 2008-2010 to anaverage of 2% between 2011 and 2012. The turmoil in Syria continues to adverselyaffect transit trade and tourist arrivals which had spillover effects on other economicsectors. Nevertheless, the Lebanese economy has maintained a relative resilience tochallenges, most notably due to a stable monetary policy, a solid banking sector, loyalinvestors and steady remittances from the large and wealthy Lebanese Diaspora.

According to the economic results of the first quarter of 2013, real GDP is expected to


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register an annual growth of 2 to 4%. Despite the challenging operating environment,the Lebanese banking sector is still reporting a healthy performance as revealed by agrowth of 8% in total banking activity for the year 2012. Total assets of banks inLebanon have reached around USD 152 billion in December 2012, which is more

than three times the GDP. With the current regional and domestic political climate notbeing supportive of major fiscal initiatives, government plans to establish a sovereignwealth fund- from the expected proceeds of oil and gas exploitation off the Lebanesecoast- would bring down the debt level and benefit the Lebanese economy over themedium term. The key challenge remains to target budgetary deficits and to bringthem down to international norms, while maintaining macroeconomic stability andlaying the foundation for a more dynamic economy.

The Structure of the Association of Banks in Lebanon (ABL) is composed that, firstThe General Assembly, second The Board of Directors, third The Secretariat General,

forth The Advisory Committees.

The Housing Development Finance Corporation Limited (HDFC) was amongst thefirst to receive an 'in principle' approval from the Reserve Bank of India (RBI) to setup a bank in the private sector, as part of RBI's liberalization of the Indian BankingIndustry in 1994. The bank was incorporated in August 1994 in the name of 'HDFCBank Limited', with its registered office in Mumbai, India. HDFC Bank commencedoperations as a Scheduled Commercial Bank in January 1995.

The bank has three key business segments like wholesale banking, retail banking and

Treasury.The strengths of HDFC bank are, HDFC bank is the second largest private bankingsector in India having 2,201 branches and 7,110 ATMs, HDFC bank is located in

1,174 cities in India and has more than 800 locations to serve customers throughTelephone banking, The banks ATM card is compatible with all domestic andinternational Visa/Master card, Visa Electron/ Maestro, Plus/cirus and AmericanExpress. This is one reason for HDFC cards to be the most preferred card forshopping and online transactions.

The weakness of HDFC bank are, HDFC bank doesnt have strong presence in Ruralareas, where as ICICI bank its direct competitor is expanding in rural market, HDFCcannot enjoy first mover advantage in rural areas. Rural people are hard core loyals interms of banking services. HDFC lacks in aggressive marketing strategies likeICICI.The bank focuses mostly on high end clients.

The opportunities of HDFC bank are, HDFC bank has better asset quality parametersover government banks; hence the profit growth is likely to increase, The companiesin large and SME are growing at very fast pace. HDFC has good reputation in termsof maintaining corporate salary accounts, HDFC bank has improved its bad debts

portfolio and the recovery of bad debts are high when compared to government banks,HDFC has very good opportunities in abroad.


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The threats of HDFC bank are, HDFCs nonperforming assets (NPA) increased from

0.18 % to 0.20%. Though it is a slight variation its not a good sign for the financial

health of the bank, The non-banking financial companies and new age banks areincreasing in India, The HDFC is not able to expand its market share as ICICI

imposes major threat.The strengths of Lebanese banks are represented by the liberal economic system.They include mature central banking authority, a widespread and developed bankingculture, support from BDL in the case of a crisis, and enhanced BDL regulations andsupervision, a healthy banking system, a Banking Secrecy Law, sound bankmanagement, improved risk management, diversity in bank funding activities: coredeposits, Certificates of Deposits (CD)15, Preferred Shares, IFC16, syndicated loans.

A very important weakness is denoted by the fact that the Government is financed bybanks even with a lack of acceptable standards. Other factors of weaknesses includethe very weak corporate governance, the gradual disappearance of the bill ofexchange (i.e. draft) in trade financing, the lack in economic recovery fundamentalsand the lack of transparency in the annual reports of many banks, information andanalysis (BDL Reports, 2004).

As for the opportunities, they are demonstrated by the potential benefits privatizationcould create: ample opportunities for economic growth (e.g., electricity, generaldistribution, collection), the Banking Over Borders concept extension toregional countries. The securitization of government assets will create new assets for

banks.The challenges are represented by the weight of the public debt a potential threat incase financial reforms are not introduced. Basel II requirements might defy theexistence of smaller banks in the system and the unstable political environment. Insummary, Lebanese banking system has all the characteristics, from attractive interestrates to banking secrecy law, to attract local and foreign deposits. And with the fourdistinct banking trends: retail, universal, regional and consolidation, the Lebanesebanking sector is serving better its customers and responding faster to their needswhether locally or even internationally.

Lebanon was often called the Switzerland of the Middle East, mainly because of itswell-reputed banking network that was built up between the end of the first world warand the beginning of the civil war in the mid-seventies. The power of the Bankingsector in Beirut drew in most of the Arab capital from the Gulf, later proving itsability to manage funds from any origin. This became a true tradition, formingthe cornerstone of the image of Lebanons wealth. Banks in Lebanon mainly play the

traditional role of society's financial go between. They play this role in an open andliberal financial market that encourages competition. 69 Banks are registered at theNational Bank of Lebanon/Banque du Liban; With 62 active commercial banks and 7

specialised medium and long term credit banks, the Lebanese Banking sector


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currently employs about 15,000 individuals in 780 branches conveniently spreadthroughout the country, and manages more than USD 45.7 billion in assets nation-wide.

The development and strength of the banks in Lebanon are due to several reasons,

some of which are, Specifying a minimum percentage of required reserve ratios basedon total deposits of the banks, Organizing the process of issuing treasury bonds andtreasury bills whether in foreign currencies or national currency to meet the financialneeds of the government and ensure a better management of public debt at the sametime, Encouraging banks to strengthen its capital base and diversify its assets toguarantee a minimum level of solvency to catch up with the requirements of Basel3in the year 2015, The governor of the central bank avoided the global financial crisisthat started in 2008. Instead, there was high percentage of economic growth inLebanon in 2008 and 2009 because of conservative and careful but wise financial

policy and strategically controlled investment, Merger of banks or even theacquisition of the weak banks by the strong banks under the control, supervision andapproval of the central bank of Lebanon, Implementation of international laws in theprocess of transparency and fighting money laundering; the Lebanese banks orforeign banks ask about the source of any large amount of money that a customeracquires, The Lebanese banks are characterized by providing diversity of updated andmodern services.

To protect our customers' interests, we ensure the following which will become ourwinning strategy: Commitment to a fundamental-based ethical approach supported by

in-house research expertise that is free of preconceived notions, Conservatism woveninto all of the Group's product offerings. These are based on the philosophy of a clearopen architecture behind every asset allocation at the core of every product portfolio,and a sharp focus on a research-based approach in product selection, Implementingonly tried and trusted investment strategies across all portfolio segments, A multi-segment advisory approach where each segment meets its specific advisoryobjectives.

The Lebanese banking sectors relatively high level of success in recent years has

garnered international attention. International business media outlets have praisedLebanon for being one of very few countries continuing to report growth since thefinancial crash of 2008. The high global regard of Lebanons financial sector also lies

in its active cooperation with international institutions and implementation of anti-money laundering measures.

The procedure of licensing in INDIA are, In terms of Rule 11 of the Banking

Regulation (Companies) Rules, 1949 applications shall be submitted in the prescribed

form (Form III), Applications for setting up banks in the private sector, along with

other details as mentioned above, should reach the following address on or before July1, 2013.The Chief General Manager-in-Charge,Department of Banking Operations


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and Development, Reserve Bank of India, Central Office,12th Floor, Central Office

Building, Shahid Bhagat Singh Road,Mumbai-400001.

The procedure of RBI decision includes, In view of the increasing emphasis on

stringent prudential norms, transparency, disclosure requirements and moderntechnology, banks need to have strength and efficiency to work profitably in a highlycompetitive environment, Banking being a highly leveraged business, licenses shallbe issued on a very selective basis to those who conform to the above requirements,who have an impeccable track record and who are likely to conform to the bestinternational and domestic standards of customer service and efficiency. RBI mayapply additional criteria to determine the suitability of applications, in addition to thefit and proper criteria prescribed at paragraph 2(B). Thereafter, the applications will

be referred to a High Level Advisory Committee to be set up by RBI.

We use three strategy for marketing like, segmentation strategy, positioning strategyand targeting strtegy.

Banking is the key sector of the Lebanese economy, accounting for 35% of GDP

growth. It is also the sector most representative of the history, culture, and talents of

the Lebanese people. Lebanons banking and financial sector is unique in its attractive

features and its resilience and stability, despite numerous periods of political unrest.

The sector has also proven its ability to constantly evolve in the aim of adapting to

national, regional and international trends and requirements. It has remained attractive

to more resilient, long-sighted investors in the region and beyond. The Lebanese

banking sector has played a major role in fueling the economic growth of Lebanon

and ensuring the relative stability of the financial sector as a whole. Banks and other

financial institutions in Lebanon fall under the jurisdiction of the Bank of Lebanon

(BDL), the country's central bank, which is the bank regulatory authority. The Bank

of Lebanon controls entry into the banking industry, defines the scope of banking

activities and sets prudential regulations and codes of practice for banks. The BDL is

also vested with other powers aimed at the supervision and development of the

banking sector.


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INTRODUCTION OF THE SELECTED COMPANY


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From the learnings from the first report, on the basis of various aspects we have

decided to start a new Bank. Our detailed analysis behind these decisions will be

given ahead.

Before starting with the introduction of our proposed bank at Lebanon we would like

to introduce some of the most dominant regulatory without which we cant think of a

New bank in Lebanon. Banque-Du-Liban and Association of Banks of Lebanon are

the two major dominating authorities in banking industry in Lebanon. So lets start

with the introduction of the central bank of Lebanon.

BANQUE DU LIBAN:

Establishment, General Mission, Prerogatives and Coordination With The

Governmen1t:

The Banque du Liban was established by the Code of Money and Credit promulgated

on the 1st of August 1963, by Decree no. 13513. It started to operate effectively on

1st April, 1964.

BDL is a legal public entity enjoying financial and administrative autonomy. It is not

subject to the administrative and management rules and controls applicable to the

public sector. Its capital is totally appropriated by the State.

The BDL is vested by law with the exclusive right to issue the national currency. As

stipulated by article 70 of the Code of Money and Credit, the BDL is entrusted with

the general mission of safeguarding the national currency in order to ensure the basis

for sustained social and economic growth. This mission consists of the:

- Safeguard of monetary and economic stability

- Safeguard of the soundness of the banking sector

- Development of money and financial markets

- Development and regulation of the payment systems and instruments

- Development and regulation of money transfer operations including electronic

transfers

1 http://www.bdl.gov.lb/pages/index/1/137/Role-and-Functions.html


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- Development and regulation of the clearing and settlement operations relative to

different financial and payment instruments and marketable bonds

The BDL is endowed by law, with the prerogatives to fulfill its mission. It can use all

measures it deems appropriate to ensure exchange rate stability, specifically theintervention in the foreign exchange market by buying and selling foreign currencies.

The BDL controls bank liquidity by adjusting discount rates, by intervening in the

open market, as well as by determining credit facilities to banks and financial

institutions. It regulates banks' credit in terms of volume and types of credit, by

imposing credit ceiling, by directing credits towards specific purposes or sectors and

setting the terms and regulations governing credits in general.

The BDL imposes on banks reserve requirements on assets and/or loans as determined

by BDL, as well as penalties should shortfalls occur. Investment in TBs may be

considered by the BDL as part of the reserve requirements.

The BDL grants licenses for the establishment of banks, financial institutions,

brokerage firms, money dealers, foreign banks, leasing companies and mutual funds

in Lebanon. The Banking Control Commission controls and supervises these

institutions. Conferring with the Association of Banks, the BDL issues circulars and

resolutions governing the relations of banks with their customers.

There is a regular coordination between the BDL and the Government in order to

ensure consistency between BDL's objectives and those of the Government.

Cooperation with the Government implies coordinating fiscal and monetary policy

measures. It informs the Government on economic matters that might negatively

affect the national economy and currency and suggests measures that might benefit

the balance of payments, the price level, public finance and offers advice on how to

promote economic growth. It also ensures the relations between the Government and

international financial institutions.


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THE GOVERNING BODY

1. THE GOVERNOR AND VICE-GOVERNORS

The Banque du Liban is managed by the Governor assisted by four Vice-

Governors,and the Central Council.

The Governor is the legal representative of the Banque du Liban, and has extensive

authority on the management of the Bank. He is entrusted with the enforcement of the

Code of Money and Credit, and the implementation of the Central Council's

resolutions. Upon the proposal of the Minister of Finance, the Governor is appointed

by decree sanctioned by the Council of Ministers, for a renewable six- year term.

After the consultation with the Governor and upon the proposal of the Minister of

Finance, the Vice-Governors are appointed by decree sanctioned by the Council of

Ministers for a renewable five-year term. They assist the Governor in managing the

Bank, carrying out functions specified by the Governor. In addition, they assume their

duties as members of the Central Council.

2. THE CENTRAL COUNCIL

The Central Council sets the monetary and credit policies of the Bank, including

money supply, and discount and lending rates. It discusses and decides, among other

things, on issues concerning the banking and financial sectors, the establishment of

clearing houses, the issuing of currency and on loan requests by the public sector

entities. The Council decides also on the rules and procedures that govern the staff

and operations of the Bank, and on its annual budget and accounts.

The members of the Central Council are:

The Governor, as chairman.

The four Vice-Governors.

The Director General of the Ministry of Finance, ex officio but strictly as member

of the Council.

The Director General of the Ministry of Economy and Trade, ex officio but

strictly as a member of the Council.

The Current Council is composed of:


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Riad T. Salam Governor Biography

Raed H. Charafeddine 1st Vice-Governor Biography

Saad Andary 2nd Vice-Governor Biography

Muhammad Baasiri 3rd Vice-Governor BiographyHaroutioun Samuelian 4th Vice-Governor Biography

Alain Bifani Director General of the Ministry of Finance Biography


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THE ASSOCIATION OF BANKS IN LEBANON (ABL)

HISTORY / STRUCTURE

Constitution and Objectives

The Association of Banks in Lebanon was founded in 1959, by virtue of License No

1643, dated October 6, 1959. The constitutive administrative assembly was then

composed of the following members:

H.E. Pierre Emile EDDE Beirut Riyad Bank SAL

Anis Abdel Hamid BIBI National Union Bank SAL

Julius Roger John THOMSON Chase Manhattan Bank

Jean Fares Saad ABOU JAOUDE Banque Libanise pour le Commerce SAL

Sheikh Fouad Salim AL DAHDAH Al Ahli Bank SAL

By virtue of the bylaws, every bank enlisted in the list of banks set up by the Banque

du Liban (Central Bank) has the right to join the Association as an active member,

upon its request. dMoreover, the representative offices of foreign banks may adhere to

the Association, as Associate members, on equal footing with the member banks in

rights and obligations. However, they do not have the right to vote or to be candidate

for the membership of the Board of Directors.

The Association aims at achieving the following objectives:

Strengthening cooperation among the member banks through setting up a common

picture for the higher interest of the sector.

Representing the profession and defending collectively the interests of the banking

sector.

Highlighting the fundamental role of banks in upholding the national economy,

through catering for an important share of the necessary financing needs to

promote growth.

Working with the concerned authorities to find and develop the regulations and

promulgate the legislations in order to develop the banking profession, in addition


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to expressing opinions regarding the projects and laws pertaining to the financial

and banking affairs.

Reflecting the positive picture of the banking sector to the local and foreign public

opinion, through multi-media, objective and arduous efforts.

Enhancing the banking performance level through improving the competences of

the human resources working in this sector, continuously increasing their

capacities and creating an ongoing atmosphere of understanding with the users of

the sector, in order to guarantee the stability of the labor force in it and ensure the

joint interests for all partners.

Endeavoring to consolidate cooperation between the banks in all other countries,

especially in the Arab countries, in order to achieve the objectives of the

Association.

PRESIDENTS OF BOARDS OF DIRECTORS:

Since its establishment, the Association of Banks in Lebanon elected 18 Boards of

Directors, presided by 12 banking figures, as following:

The Bank Date of Election

H.E. Pierre EDDE Beirut Riyad Bank SAL 18/11/1959

Mr. Anis AL BIBI (by

interim)

National Union Bank SAL 1968

Sheikh Joseph

GEAGEA

Joseph GEAGEA Bank

SAL

14/3/1968

Dr. Assaad SAWAYA Banque de lIndustrie et

du Travail SAL

28/3/1978

Mr. Antoine CHADER Capital Trust Bank SAL 29/6/1983

M. Adel AL KASSAR

(by interim)

Fransabank SAL 7/5/1985

Mr. Abdallah AL

ZAKHEM

Business United Bank

SAL

24/11/1987

Dr. George AACHI CCMO SAL 2/11/1989

H.E. Raymond AUDI Audi Bank SAL 12/11/1993


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Dr. Francois BASSIL Byblos Bank SAL 8/11/1994; 6/12/2005;

14/11/2007 and 5/7/2013

H.E. Farid RAPHAEL Banque Libano-Francaise

SAL

15/11/1997 and 20/11/1999

Dr. Joseph TORBEY Crdit Libanais Bank SAL 27/11/2001, 21/11/2003,

30/6/2009 and 27/6/2011

HEADQUARTERS OF THE ASSOCIATION:

At the beginning of the sixties of the last century, the Association located its

headquarters in Tabet Building overlooking Riyad Al Solh Square and the Banks

Street. It then moved, in 1982, to Macarri Center located on Burj Hammoud Dora

highroad. At the beginning of July 2001, it moved to its new headquarters in Al Saifiarea, at the intersection between Gouraud Street and George Haddad Street, to a ten-

floor building (out of which 4 underground floors), the overall surface of which 3762

square meters, with offices extending over 2241 square meters. As for the overall cost

of the headquarters, it amounted to 6 million USD.

RETROSPECTIVE

During the past fifty years, Lebanon, the Arab region and the whole world witnessed aseries of great crises, with a military, a security, a political, a financial or an economic

character. The banking sector has proven, for many times and throughout half a

century, its capacity to assimilate the shocks, of any level of strictness whatsoever,

and to face the challenges, thus becoming an example of resistance and immunity to

follow suit. You will find below a quick reminder of the major events and crises

Lebanon has witnessed since the beginning of the sixties of the past century and those

the Association of Banks in Lebanon and the banking sector in Lebanon were

confronted with, with wisdom, shrewdness, solidarity, vision and clear-sightedness, in


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cooperation and coordination with the concerned official authorities, in order to

preserve the rights of shareholders and investors in the present sector, on the one

hand, and the rights of the depositors and the national economic interests, on the other

hand.

1 Intra Bank crisis on October 16, 1966

2 The Six-Day War, June 6, 1967

3 The Two-Year War: 1975-1977

4 The Israeli invasion and the accelerated fall on the economic, security and political

levels, esp. the deterioration of the exchange rate of the Lebanese Pound: 1982

1988.

5 Division of the Lebanese State during the era of the two governments: 19881990.

6 The Israeli aggression (the Seven-Day War): July 1993.

7 The Israeli aggression (The Grapes of Wrath Operation): April 1996.

8 The assassination of Prime Minister Rafic Hariri in February 2005, and the ensuing

series of assassinations which targeted several intellectuals and politicians and

explosions targeting many regions, residential areas, and commercial and industrial

institutions in the country.

9 The Israeli aggression on Lebanon in July 2006.

10 The global financial and economic crisis: September 2008.

b- The Contribution to the Consolidation of the States authority and to the

Attenuation of the Misery of the Lebanese

Within this context, it is worthy to mention, indicatively not restrictively, a series of

initiatives organized by the Association of Banks in Lebanon, to assist the Lebanese

State and/or the Lebanese population in bearing the severe and difficult conditions the

country has witnessed in the past five decades. Among these most important

initiatives:


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1 Contribution of the ABL of an amount of 4.5 million USD in the Fund of the High

Relief Council to attenuate the effects of the Israeli aggression (April 1996).

2 Yearly contribution of the ABL, over several years (1997-2000), of an amount of 50

thousand USD, in a campaign in support of the South and the Western Bekaa.

3 Contribution of the ABL to the economic institutions in a campaign in support of

the month of sales organized by the Ministry of Trade and Economy (February 1998).

4 Contribution of the ABL amounting to 4 million USD to the national campaign to

face the effects of the Israeli aggression (June 1999).

5 Contribution of the ABL to Lebanon 2000 campaign (the beginning of the third

millennium), December 1999January 2000.

6 Contribution of the Association to the support of the activities of the National

Commission for the commemoration of March 14, April 18 and May 25 under the

patronage of His Excellency Nabih Berry (May 2001).

7 Contribution of the Banks of an amount of 3.6 billion USD representing 10% of

their total deposits closing at the end of October 2002, under the form of two-year

bonds, at 0% interest, within the program of Paris II Conference, for debt

restructuring. This contribution, as the contribution of the Banque du Liban (Central

Bank) and the donating countries, had a clear impact to reduce the public debt

between 2003 and 2005.

8 Contribution of the Association and the banks to a unified fund created by the

economic institutions to support institutions damaged by explosions, following the

assassination of Prime Minister Rafic Hariri in February 2005. The banks

contributions to this fund amount to two million USD, constituting the largest share of

the total donations offered to this fund.

9 Contribution of the Association to the financing of the campaign revitalizing the

capital, in the downtown of Beirut (June 2005).

10 Contribution of the Association to the financing of the campaign of the one -

hundred-day truce, in cooperation with the economic institutions (June 2007).


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11 Contribution of the Association and the banks with an amount of two million USD

to the support of the Lebanese Army in counter-terrorism and the consolidation of

stability, following the incidents in Nahr Al Bared (July 2007).

12 Contribution of the Association and the banks with an amount of 4 million USD tosupport the program of Akhdar Dayem Association aiming at protecting the forestry

and buying fire-fighting helicopters (February 2009).

BANQUE DU LIBAN - MONETARY OVERVIEW

OVERVIEW OF THE RECENT MONETARY, BANKING, AND FINANCIAL

DEVELOPMENTS IN LEBANON2

Since mid-2010, the Lebanese economy witnessed a slowdown in activity as the

annual GDP growth rate declined from an average of 8% during 2008-2010 to an

average of 2% between 2011 and 2012. The turmoil in Syria continues to adversely

affect transit trade and tourist arrivals which had spillover effects on other economic

sectors. Nevertheless, the Lebanese economy has maintained a relative resilience to

challenges, most notably due to a stable monetary policy, a solid banking sector, loyal

investors and steady remittances from the large and wealthy Lebanese Diaspora.

According to the economic results of the first quarter of 2013, real GDP is expected to

register an annual growth of 2 to 4%

BDL's continuous commitment to exchange rate stability has become the cornerstone

in maintaining financial and price stability as a solid pillar of economic growth.

BDL's strategy of preserving a high stock of assets in foreign currencies as a

precautionary measure proved to be essential in dealing with any crisis that may

confront the economy. The BDL is currently holding more than USD 36 billion in

foreign currency assets, excluding gold reserves which are the second-largest in the

MENA region.

Earlier this year, the BDL has launched a stimulus package putting at the disposition

of banks USD 1.47 billion in Lebanese pounds at 1% interest rate. The banks, in their

turn, must lend these funds at reduced rates to support vital economic sectors such as

housing, education, renewable energy projects, innovative projects, research &

2 http://www.bdl.gov.lb/pages/index/1/119/Monetary-Overview.html


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development, and other productive sectors of the economy. The Central Bank is

aiming at stimulating growth rates in the country by creating more internal demand to

compensate for the declining regional demand. This monetary tool used by the BDL is

not likely to have negative repercussions on inflation. BDL is controlling inflation

through the management of liquidity. Its objective is to meet a 4% inflation target this

year, even with a 2% public- sector wage hike. Growing confidence in the national

currency has enhanced the Central Bank's ability to have an efficient and independent

monetary policy.

Despite the challenging operating environment, the Lebanese banking sector is still

reporting a healthy performance as revealed by a growth of 8% in total banking

activity for the year 2012. Total assets of banks in Lebanon have reached around USD152 billion in December 2012, which is more than three times the GDP.

In spite of the slight decrease registered in bank profits in 2012, other indicators were

satisfactory as compared to the year 2011. Bank deposits, the main driving force

behind the Lebanese banking activity, grew by 8% to reach a new high of USD 131

billion at end-2012, with a dollarization ratio moving down from around 66% at end-

December 2011 to 64.8 % at end-December 2012.

In parallel, lending activity last year registered more than 10% growth, with bank

credits to the private sector reaching US$ 44 billion in December 2012. The loan

dollarization ratio continued its downward trend to reach 77.6% at end-2012, its

lowest level in more than two decades.

Despite the economic slowdown and the difficult situation in the region, the Central

Bank does not expect any unpleasant surprises in the conditions of the country's

financial sector in 2013, given that banks in Lebanon have been able to weathervarious internal and external crises in the past and have so far successfully absorbed

the repercussions of the Syrian and Arab crisis. Lebanese banks have high liquidity

ratios and this has allowed them to maintain the flow of credit within the local market.

Basle III capital adequacy among Lebanese banks has exceeded 10% at a time many

other countries have failed to reach the ratio of 7%. Moreover, banks in Lebanon had

sufficiently increased their provisions to limit exposure to foreign operations.


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With the current regional and domestic political climate not being supportive of major

fiscal initiatives, government plans to establish a sovereign wealth fund- from the

expected proceeds of oil and gas exploitation off the Lebanese coast- would bring

down the debt level and benefit the Lebanese economy over the medium term. The

key challenge remains to target budgetary deficits and to bring them down to

international norms, while maintaining macroeconomic stability and laying the

foundation for a more dynamic economy.

THE STRUCTURE:

The Structure of the Association of Banks in Lebanon (ABL) is composed of the

following:

1 The General Assembly:

It is composed of all operating member banks. It has reporting and voting prerogatives

stipulated in the bylaws.

The General Assembly meets once at least per year. It elects or re-elects the members

of the Board of Directors. It also listens to the report of the Board of Directors about

its activities for the past year and about the execution of the budget for the same year.Moreover, the General Assembly ratifies the budget set up by the Board of Directors

for the coming year. It also convenes when need be, according to the situations

stipulated in the bylaws. It solely has the right to amend the bylaws, with a three-

quarter majority of the members.

2 The Board of Directors:

It is the higher executive authority, elected by the General Assembly for two years. It

delineates the ABL policy to achieve its objectives, setting up its administrative and

internal regulations. It also adopts its annual budget and its periodical reports, presents

propositions and recommendations to the relevant official parties, designates the

Secretary General and the temporary and permanent commissions, and decides of the

adherence to the international unions and organizations and of the filing of or

involvement in lawsuits.

The Board elects, among its members, a president, a vice president, a secretary anda treasurer, constituting altogether the Bureau of the Board. The Board of the


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Directors holds periodical (monthly) meetings with the Governor and Vice-Governors

of the Banque du Liban (Central Bank) and the Banking Control Commission. The

conclusions of these meetings will be generalized to all operating banks in Lebanon.

3 The Secretariat General:

The structure of the Secretariat General comprises 4 directorates:

Administrative and financial directorate

Directorate of studies and statistics

Directorate of training and rehabilitation of human resources

Directorate of communication and public relations

4 The Advisory Committees:

The Advisory committees assist the ABLs Board of Directors in its various activities

and are particularly in charge of the following:

Assisting in studying draft circulars set up by the Banque du Liban (Central Bank)

and by the Banking Control Commission, and bills set up and submitted by the

Parliament.

Recommending amendments to be introduced to draft circulars and laws and

undertaking studies in specific economic, financial and banking fields.

Providing counseling for the development of mechanisms and conditions for the

banking professions in all its elements and branches.

Active Members

1.

(1

)

FRANSABANK S.A.L. 37

.

(9

0)

ARAB AFRICAN

INTERNATIONAL BANK

2.

(3

)

BANQUE MISR LIBAN S.A.L.

(BML SAL)

38

.

(9

EMIRATES LEBANON BANK

S.A.L.


41/130

2)

3.

(5

)

ARAB BANK P.L.C. 39

.

(9

3)

BANQUE BEMO S.A.L.

4.

(7

)

HSBC BANK MIDDLE EAST

LIMITED

40

.

(9

4)

LEBANON AND GULF BANK

S.A.L.

5.

(9)

RAFIDAIN BANK 41

.(9

5)

SAUDI LEBANESE BANK S.A.L.

6.

(1

0)

BANQUE LIBANO-FRANCAISE

S.A.L.

42

.

(9

8)

STANDARD CHARTERED BANK

S.A.L.

7.(1

1)

B.L.C. BANK S.A.L. 43.

(1

01

)

AL-MAWARID BANK S.A.L.

8.

(1

2)

NEAR EAST COMMERCIAL

BANK S.A.L.

44

.

(103

)

CREDITBANK S.A.L.

9.

(1

4)

BLOM BANK S.A.L. 45

.

(1

04

)

UNITED CREDIT BANK S.A.L.


42/130

1

0.

(1

6)

FEDERAL BANK OF LEBANON

S.A.L.

46

.

(1

05

)

BANK AL-MADINA S.A.L.

1

1.

(1

7)

THE SAUDI NATIONAL

COMMERCIAL BANK

47

.

(1

08

)

FIRST NATIONAL BANK S.A.L.

1

2.

(1

9)

SOCIETE GENERALE DE

BANQUE AU LIBAN S.A.L.

(SGBL)

48

.

(1

09

)

AL BARAKA BANK S.A.L.

1

3.

(2

2)

BANKMED S.A.L. 49

.

(1

10

)

MEAB S.A.L.

1

4.

(2

7)

AUDI SARADAR PRIVATE

BANK S.A.L.

50

.

(1

11

)

BLOMINVEST BANK S.A.L.

1

5.

(2

8)

BBAC S.A.L. 51

.

(1

13

)

MEDINVESTMENT BANK S.A.L.

1

6.

(3

AUDI INVESTMENT BANK

S.A.L.

52

.

(1

CREDIT LIBANAIS INVESTMENT

BANK S.A.L.


43/130

3) 14

)

1

7.

(3

4)

SYRIAN LEBANESE

COMMERCIAL BANK S.A.L.

53

.

(1

15

)

CITIBANK N.A.

1

8.

(3

5)

BANQUE PHARAON ET CHIHA

S.A.L.

54

.

(1

18

)

ARAB INVESTMENT BANK

S.A.L.

1

9.

(3

6)

BANQUE DE CREDIT

NATIONAL S.A.L.

55

.

(1

21

)

FRANSA INVEST BANK S.A.L.

2

0.

(3

9)

BYBLOS BANK S.A.L. 56

.

(1

23

)

BYBLOS INVEST BANK S.A.L.

2

1.

(4

1)

BANQUE DE L'HABITAT S.A.L. 57

.

(1

25

)

ARAB FINANCE HOUSE S.A.L.

(ISLAMIC BANK)

2

2.

(4

3)

FINANCE BANK S.A.L. 58

.

(1

26

)

LEBANESE ISLAMIC BANK S.A.L


44/130

2

3.

(4

8)

BANQUE DE L'INDUSTRIE ET

DU TRAVAIL S.A.L. (BIT BANK)

59

.

(1

27

)

BLOM DEVELOPMENT BANK

S.A.L.

2

4.

(5

2)

IBL BANK SAL 60

.

(1

29

)

FFA PRIVATE BANK S.A.L.

2

5.

(5

3)

CREDIT LIBANAIS S.A.L. 61

.

(1

30

)

BANK OF BEIRUT INVEST S.A.L.

2

6.

(5

6)

BANK AUDI sal 62

.

(1

31

)

WARKA BANK FOR

INVESTMENT & FINANCE CO

J.S.C.

2

7.

(5

8)

FENICIA BANK S.A.L. 63

.

(1

32

)

BANK OF BAGHDAD PRIVATE

S.A.Co

2

8.

(6

2)

NORTH AFRICA COMMERCIAL

BANK S.A.L.

64

.

(1

33

)

CSCBANK SAL

2

9.

(6

LEBANESE SWISS BANK S.A.L. 65

.

(1

AL-BILAD ISLAMIC BANK FOR

INVESTMENT & FINANCE P.S.C.


45/130

3) 34

)

3

0.

(6

7)

BANK SADERAT IRAN 66

.

(1

35

)

IBL INVESTMENT BANK S.A.L.

3

1.

(6

8)

BSL BANK S.A.L. 67

.

(1

36

)

QATAR NATIONAL BANK S.A.Q.

- Lebanon

3

2.

(7

3)

NATIONAL BANK OF KUWAIT

(LEBANON) S.A.L.

68

.

(1

37

)

CEDRUS INVEST BANK S.A.L.

3

3.

(7

5)

BANK OF BEIRUT S.A.L. 69

.

(1

38

)

BLC INVEST S.A.L.

3

4.

(8

0)

JAMMAL TRUST BANK S.A.L. 70

.

(1

39

)

LiBANK S.A.L. (Levant Investment

Bank)

3

5.

(8

4)

AHLI INTERNATIONAL BANK

S.A.L.

71

.

(1

40

)

NATIONAL BANK OF ABU

DHABI PJSC


46/130

3

6.

(8

5)

HABIB BANK LIMITED 72

.

(1

41

)

INVEST BANK PSC

Remark: The number between brackets preceding the Banks name is the number stated on

the official list of Banks issued by the Banque du Liban (The Central Bank).

Associate Members

(Representative Offices of

Foreign Banks)

1 BANK OF NEW YORK (THE)

2 COMMERZBANK AG

3 GULF INTERNATIONAL BANK BSC

4 INTESA SANPAOLO SPA

5 JPMORGAN CHASE BANK NA


47/130

CATEGORIES OF BANKS

1. Lebanese Banks S.A.L.

2.

(34)

SYRIAN

LEBANESE

COMMERCIAL

BANK S.A.L.

1. (1) FRANSABANK

S.A.L.

3.

(53)

CREDIT

LIBANAIS S.A.L.

2. (10) BANQUE LIBANO-

FRANCAISE S.A.L.

4.

(62)

NORTH AFRICA

COMMERCIAL

BANK S.A.L.

3. (11) B.L.C. BANK S.A.L. 5.

(73)

NATIONAL

BANK OF

KUWAIT

(LEBANON)

S.A.L.

4. (12) NEAR EAST

COMMERCIAL

BANK S.A.L.

6.

(84)

AHLI

INTERNATIONAL

BANK S.A.L.

5. (14) BLOM BANK

S.A.L.

7.

(92)

EMIRATES

LEBANON BANK

S.A.L.

6. (16) FEDERAL BANK

OF LEBANON

S.A.L.

8.

(109)

AL BARAKA

BANK S.A.L.

7. (19) SOCIETE

GENERALE DE

BANQUE AU

LIBAN S.A.L.

(SGBL)

9.

(125)

ARAB FINANCE

HOUSE S.A.L.

(ISLAMIC BANK)

8. (22) BANKMED S.A.L. 10.

(126)

LEBANESE

ISLAMIC BANK

S.A.L

9. (27) AUDI SARADAR

PRIVATE BANK


48/130

S.A.L.

10. (28) BBAC S.A.L. 3. Lebanese Banks S.A.L.

with Foreign non-Arab

Control

11. (35) BANQUE

PHARAON ET

CHIHA S.A.L.

1.

(98)

STANDARD

CHARTERED

BANK S.A.L.

12. (36) BANQUE DE

CREDIT

NATIONAL S.A.L.13. (39) BYBLOS BANK

S.A.L.

4. Arab Banks

14. (48) BANQUE DE

L'INDUSTRIE ET

DU TRAVAIL

S.A.L. (BIT BANK)

1. (5) ARAB BANK

P.L.C.

15. (52) IBL BANK SAL 2. (9) RAFIDAIN BANK16. (56) BANK AUDI sal 3.

(17)

THE SAUDI

NATIONAL

COMMERCIAL

BANK

17. (58) FENICIA BANK

S.A.L.

4.

(90)

ARAB AFRICAN

INTERNATIONAL

BANK

18. (63) LEBANESE SWISS

BANK S.A.L.

5.

(131)

WARKA BANK

FOR

INVESTMENT &

FINANCE CO

J.S.C.

19. (68) BSL BANK S.A.L. 6.

(132)

BANK OF

BAGHDAD

PRIVATE S.A.Co


49/130

20. (75) BANK OF BEIRUT

S.A.L.

7.

(134)

AL-BILAD

ISLAMIC BANK

FOR

INVESTMENT &

FINANCE P.S.C.

21. (80) JAMMAL TRUST

BANK S.A.L.

8.

(136)

QATAR

NATIONAL

BANK S.A.Q. -

Lebanon

22. (93) BANQUE BEMO

S.A.L.

9.

(140)

NATIONAL

BANK OF ABU

DHABI PJSC

23. (94) LEBANON AND

GULF BANK S.A.L.

10.

(141)

INVEST BANK

PSC

24. (95) SAUDI LEBANESE

BANK S.A.L.

25. (101) AL-MAWARID

BANK S.A.L.

5. Foreign Banks

26. (103) CREDITBANK

S.A.L.

1. (7) HSBC BANK

MIDDLE EAST

LIMITED

27. (104) UNITED CREDIT

BANK S.A.L.

2.

(67)

BANK SADERAT

IRAN

28. (105) BANK AL-

MADINA S.A.L.

3.

(85)

HABIB BANK

LIMITED29. (108) FIRST NATIONAL

BANK S.A.L.

4.

(115)

CITIBANK N.A.

30. (110) MEAB S.A.L.

31. (127) BLOM

DEVELOPMENT

BANK S.A.L.

2. Lebanese Banks S.A.L. with Arab Control


50/130

1. (3) BANQUE MISR

LIBAN S.A.L. (BML

SAL)

Remark: The number between

bracketspreceding the Banks

name is the number stated on

the official list of Banks issued

by the Banque du Liban (The

Central Bank).

- BDLs official list of banks n

109, 125, 126, 127 & 134 are

Islamic banks.

Investment Banks

1. (33) AUDIINVESTMENT

BANK S.A.L.

2. (41) BANQUE DE

L'HABITAT S.A.L.

3. (43) FINANCE BANK

S.A.L.


51/130

4. (111) BLOMINVEST

BANK S.A.L.

5. (113) MEDINVESTMENT

BANK S.A.L.

6. (114) CREDIT LIBANAIS

INVESTMENT

BANK S.A.L.

7. (118) ARAB

INVESTMENT

BANK S.A.L.

8. (121) FRANSA INVEST

BANK S.A.L.

9. (123) BYBLOS INVEST

BANK S.A.L.

10. (129) FFA PRIVATE

BANK S.A.L.

11. (130) BANK OF BEIRUT

INVEST S.A.L.

12. (133) CSCBANK SAL

13. (135) IBL INVESTMENT

BANK S.A.L.

14. (137) CEDRUS INVEST

BANK S.A.L.

15. (138) BLC INVEST S.A.L.

16. (139) LiBANK S.A.L.

(Levant Investment

Bank)


52/130

INTRODUCTION OF HDFC

Basic Introduction3:

The Housing Development Finance Corporation Limited (HDFC) was amongst the

first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set

up a bank in the private sector, as part of RBI's liberalization of the Indian Banking

Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC

Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced

operations as a Scheduled Commercial Bank in January 1995.

Promoter:

HDFC is Indias premier housing finance company and enjoys an impeccable track

record in India as well as in international markets. Since its inception in 1977, the

Corporation has maintained a consistent and healthy growth in its operations to

remain the market leader in mortgages. Its outstanding loan portfolio covers well over

a million dwelling units. HDFC has developed significant expertise in retail mortgage

loans to different market segments and also has a large corporate client base for itshousing related credit facilities. With its experience in the financial markets, strong

market reputation, large shareholder base and unique consumer franchise, HDFC was

ideally positioned to promote a bank in the Indian environment.

Business Focus:

HDFC Banks mission is to be a World Class Indian Bank. The objective is to build

sound customer franchises across distinct businesses so as to be the preferred provider

3 http://www.hdfcbank.com/aboutus/general.html


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of banking services for target retail and wholesale customer segments, and to achieve

healthy growth in profitability, consistent with the banks risk appetite. The bank is

committed to maintain the highest level of ethical standards, professional integrity,

corporate governance and regulatory compliance. HDFC Banks business philosophy

is based on five core values: Operational Excellence, Customer Focus, Product

Leadership, People and Sustainability.

Businesses:

HDFC Bank caters to a wide range of banking services covering commercial and

investment banking on the wholesale side and transactional / branch banking on the

retail side. The bank has three key business segments:

Wholesale Banking

The Bank's target market is primarily large, blue-chip manufacturing companies in the

Indian corporate sector and to a lesser extent, small & mid-sized corporates and agri-

based businesses. For these customers, the Bank provides a wide range of commercial

and transactional banking services, including working capital finance, trade services,

transactional services, cash management, etc. The bank is also a leading provider of

structured solutions, which combine cash management services with vendor and

distributor finance for facilitating superior supply chain management for its corporate

customers. Based on its superior product delivery / service levels and strong customer

orientation, the Bank has made significant inroads into the banking consortia of a

number of leading Indian corporates including multinationals, companies from the

domestic business houses and prime public sector companies. It is recognised as a

leading provider of cash management and transactional banking solutions to corporate

customers, mutual funds, stock exchange members and banks.

Retail Banking

The objective of the Retail Bank is to provide its target market customers a full range

of financial products and banking services, giving the customer a one-stop window

for all his/her banking requirements. The products are backed by world-class service

and delivered to customers through the growing branch network, as well as through

alternative delivery channels like ATMs, Phone Banking, NetBanking and MobileBanking.


54/130

The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank

Plus and the Investment Advisory Services programs have been designed keeping in

mind needs of customers who seek distinct financial solutions, information and adviceon various investment avenues. The Bank also has a wide array of retail loan products

including Auto Loans, Loans against marketable securities, Personal Loans and Loans

for Two-wheelers. It is also a leading provider of Depository Participant (DP) services

for retail customers, providing customers the facility to hold their investments in

electronic form.

HDFC Bank was the first bank in India to launch an International Debit Card in

association with VISA (VISA Electron) and issues the MasterCard Maestro debit card

as well. The Bank launched its credit card business in late 2001. By March 2012, the