Instruction No. 6/92: Monetary Policy - Mandatory Reserves Regulation

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INSTRUCTION NO. 6/92 Subject: MONETARY POLICY

• Mandatory Reserves .Regulation This Instruction defines the regime of mandatory reserves to be maintained in accordance with the provisions of Notice No. 01/91 issued by the Governor of the National Bank of Angola, hereby revoking Instruction No. 02/91 of October 16. 1st - Institutions Subject to Mandatory Reserves All financial institutions operating in the Country, authorized to collect deposits, are subject to maintaining mandatory reserves. 2nd - Base for Mandatory Reserves The base for mandatory reserves consists of demand and time deposits in national currency, covering the following accounts in class 3 of the Chart of Accounts of the Financial System: I - Deposits of Residents - MN II - Deposits of Non-Residents - MN 3rd - Eligible Assets for Mandatory Reserves Only the balances of the demand deposit account opened at the National Bank of Angola in the name of each Institution, relating to the daily closing of accounts, are eligible for the constitution of mandatory reserves. The aforementioned balances are those recorded in the accounting records of the National Bank of Angola, and may be provided to Institutions from 12:00 hours on the next business day. 4th - Coefficient of Mandatory Reserves The coefficient of mandatory reserves is twenty percent (20%).

5th - Method of Calculating Mandatory Reserves

1. The reserve requirement is calculated in terms of the arithmetic mean of the balances on Fridays of each month, under the demand and time deposit headings, following the following formula: ERt = a. (∑ DTt-2 / N ) where ERt Reserve requirement in month "t" a Coefficient of mandatory reserves DTt-2 Position of total deposits (demand and time) on each Friday of month "t-2" (i.e., the penultimate month) N Number of weekly positions summed
2. The effective reserve value, to be considered for compliance with the requirement, shall be the arithmetic mean of the daily balances of the banking institution's account at the National Bank of Angola, according to the following formula: REt = ∑ DBt / N where REt Effective reserves to be considered for compliance with the requirement DBt Position of the banking institution's deposits at the National Bank of Angola, on each of the days of the month, repeating, on non-business days, the position of the immediately preceding business day. N Number of calendar days in the month.
3. Under no circumstances shall the balance of the Financial Institution's account at the National Bank of Angola be less than 50% of the value of the mandatory reserves required, under penalty of application of the provisions of Article 282 of Law 4/91; combined with Article 412 of Law 5/91.

6th - Remuneration

1. The National Bank of Angola shall remunerate only the voluntary deposit of Financial Institutions. For this purpose, the positive difference between the daily balances of the bank reserve account and the respective requirement value is considered as a voluntary deposit.

2. The remuneration rate shall be established periodically by the National Bank of Angola. 7th - Penalties

3. Without prejudice to other measures that may be adopted, the National Bank of Angola will charge a rate equivalent to double the highest interest rate practiced on active operations, on the reserve shortfall ascertained at the end of each constitution period.

4. The incidence period of this penalty shall be equal to the number of days elapsed in the period subsequent to that in which the shortfall occurred. The collection of the respective charges will be effected at the end of the new period, by debit to the reserve account of the banking institution.

5. The affected Institutions will be notified by the BNA whenever penalties provided for in the preceding paragraph 1 apply. 8th - Information to be Sent to the National Bank of Angola

6. Institutions must send to the National Bank of Angola, with reference to the period indicated in 1 of point 5th, the attached table, duly completed.

7. The table mentioned in 1 must be sent to the National Bank of Angola by the 5th business day of the month of compliance with the requirement.

8. The aforementioned table, duly authenticated, shall be sent in a sealed envelope to the following address: National Bank of Angola Emission and Credit Directorate (DEC) Av. 4 de Fevereiro nº 157 LUANDA

9. In order to avoid possible delays in receiving that document, Institutions are permitted to deliver it in person at the above address, or transmit it by telefax or telex whenever it is not prepared for mailing in time to meet the delivery deadline. The numbers to be used for this purpose are 390579 (Telefax) and 3123 (Telex).

10. Institutions are obliged to retain and present to Banking Supervision, whenever requested, all documents that allow verification of the information contained in the table referred to in preceding paragraph 1. 9th - This Instruction enters into force immediately. Luanda, August 12, 1992. THE GOVERNOR SEBASTIÃO BASTOS LAVRADOR

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