Instruction No. 005-DCR/09 of December 1, 2009 on the Mandatory Reserves System

INSTRUCTION NO. 005-DCR/09 OF DECEMBER 1, 2009 ON THE MANDATORY RESERVES SYSTEM

The Governor of the Central Bank of Madagascar, Having regard to the amended Act No. 94-004 of June 10, 1994 establishing the statutes of the Central Bank of Madagascar, Having regard to the amended Act No. 95-030 of February 22, 1996 on the activity and supervision of credit institutions, Having regard to Decree No. 2007-027 of January 29, 2007 appointing the Governor of the Central Bank of Madagascar, HAS DECIDED:

Article 1: General Provisions This instruction aims to establish the rules regarding mandatory reserves applicable to credit institutions, namely: the determination methods, the constitution period, and finally, the sanctions.

Article 2: Definition For the purposes of this instruction, mandatory reserves refer to the minimum amount that credit institutions must maintain in the form of non-interest-bearing deposits with the Central Bank for a specified period.

Article 3: Determination of Mandatory Reserves The minimum amount of mandatory reserves is determined by reference to certain elements of the assets and/or liabilities of credit institutions, in Ariary and foreign currencies for both residents and non-residents, as reflected in their monthly statements and/or cumulative balance of funds held with the Central Bank.

Mandatory Reserves Base Coefficient

1. Demand deposits and similar (in Ariary and foreign currencies) Ordinary accounts Guarantee deposits Payables Other amounts due to customers Matured treasury bills/bonds (Bons de caisse échus) Payables on matured treasury bills/bonds
2. Time and savings deposits (in Ariary and foreign currencies) Time deposits Special-regime savings accounts Treasury bills/bonds in circulation (Bons de caisse en cours) 15%

Subjected credit institutions must submit to the Central Bank - Credit Department, no later than the 10th of each month, a declaration conforming to the model attached as an annex, showing the calculation elements for their reserves.

Article 4: Period and Method of Constitution Mandatory reserves are calculated based on the elements of month (m – 1) and must be constituted over a period of 1 month from the 1st to the last business day of month m, as follows: Until receipt of the declaration due on the 10th of the month, the daily monitoring of the credit institution's status is carried out provisionally based on the mandatory reserves required for the previous month. This status is adjusted upon receipt of the declaration. The total mandatory reserves are constituted by the average balance as of the transaction date of the credit institution's current account held in the books of the Central Bank. Surplus mandatory reserves identified at the end of a period are not carry-forwardable.

Article 5: Sanctions A credit institution that fails to constitute the minimum required amount of reserves within the timeframe set by Article 4 above is subject to a penalty calculated based on the observed shortfall and the number of days in the period. These interest charges, calculated at the repo rate plus 5 percentage points, are automatically debited to the credit institution's current account held in the books of the Central Bank. The posting date of the entry is communicated to the concerned credit institution. Delays in transmitting information, as well as communications of inaccurate documents or information, are subject to the sanctions or penalties stipulated in Articles 49, 52, and 83 of the amended Act No. 95-030 of February 22, 1996 on the activity and supervision of credit institutions.

Article 6: Transitional and Final Provisions As a transitional measure, the application period for the mandatory reserves of December 2009 runs from November 15 to December 31, 2009. This instruction enters into force on January 1, 2010. All provisions of Instruction No. 01-CR/05 of March 15, 2005 are hereby repealed.

Antananarivo, December 1, 2009 The Governor, Frédéric RASAMOELY.

MANDATORY RESERVES DECLARATION: STATUS AS OF: MANDATORY RESERVES BASE RESIDENTS | NON-RESIDENTS EXTRACT OF MONTHLY STATEMENT Ordinary accounts 210 Guarantee deposits 213 Payables 2186 Other amounts due to customers 219 Matured treasury bills/bonds 220 Payables on matured treasury bills/bonds 2286 Sub-total (1) Time deposits 211 Special-regime savings accounts 212 Treasury bills/bonds in circulation 220 Sub-total (2) TOTAL = (1) + (2) Mandatory reserves to be constituted TOTAL x 15 %