Circular No 106: Development and Development of Free Zones and Industrial Parks

Bank of the Republic of Haiti
CIRCULAR
No 106

TO BANKS

Pursuant to Article 83 of the Law of May 14, 2012, on banks and other financial institutions, banks must comply with the following provisions: a) the cap on the establishment of mandatory reserves on all resources used to finance the development and improvement of free zones and industrial parks, and b) the interest rates to be applied to these loans.

1. Preferential Regime

With the aim of reducing costs related to investments in duly authorized free zones or industrial parks, banks are authorized not to establish mandatory reserves on resources in gourdes used to finance free zones and industrial parks.

These credits are intended for:

• the construction of buildings;
• the installation of all essential infrastructure for the proper operation of free zones and industrial parks (roads, drainage, water, electricity, etc.).

Once these credits are granted, they become an integral part of the banks' loan portfolios with all associated risks and, as such, must satisfy all requirements of current prudential standards, notably Circular 87 and Circular 83-4.

To facilitate these credits, the BRH is willing to grant advances to banks for a period of up to fifteen (15) years. The annual interest rate on advances will be within a range of 1% to 3%, at the date of their granting, and will be maintained throughout the duration of these advances. Under no circumstances will this rate be less than 1% or greater than 3%, regardless of the rate applicable for 91-day BRH bills at the date of the advance. In order to benefit from these advances, banks must provide the BRH with proof of the effective establishment of the credits, i.e., that they are available for disbursement.

Regarding all loans granted from BRH financing, banks must apply a fixed interest rate not exceeding 7% per year for a period of fifteen (15) years from the date of credit approval. After this period, the interest rate may be variable and revisable by the bank according to market conditions.

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It is understood that each advance will be subject to a separate contract between the BRH and the bank. Furthermore, funds advanced by the BRH and not yet disbursed by the bank to potential borrowers cannot be considered as constitutive elements of mandatory reserves and are therefore not eligible for placement in BRH bills.

2. Reports

The BRH requires banks to submit to it at the end of each quarter, namely December 31, March 31, June 30, and September 30, a detailed report on the evolution of credit granted in industrial parks and free zones.

This report, the model of which is attached to this circular, must be attached to the compliance reports related to Circular 83-4 on the concentration of credit risks.

3. Sanctions

In the event of non-compliance with Section 2 of this circular, the BRH reserves the right to take the following administrative sanctions:

a) Delay in producing reports: penalties in accordance with the current circular on the subject.

b) Delay in transmitting reports: penalties in accordance with the current circular on the subject.

c) Non-submission of reports: penalties in accordance with the current circular on the subject.

3. Entry into Force

This circular enters into force on December 11, 2015.

(Signature)
Charles Castel
Governor

Appendix

Appendix 1: Credit Evolution Report / Free Zones and Industrial Parks

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Appendix 1

CREDIT EVOLUTION REPORT / Free Zones and Industrial Parks

Quarterly Report

Banking Institution: __________________________ As of: __________________________

	Credit Outstanding by Free Zone
ACTIVITY	OUTSTANDING	% OF TOTAL CREDITS

	Credit Outstanding by Industrial Park
ACTIVITY	OUTSTANDING	% OF TOTAL CREDITS

Signature of two authorized executives: __________________________ __________________________

Position/Title: __________________________ __________________________