CONVENTION ON THE OPERATION OF AN AUTOMATED INTERBANK CLEARING AND SETTLEMENT SYSTEM

BETWEEN:

The Central Bank of the Congo, a public law institution, with its registered office at Boulevard Colonel Tshatshi, No. 563, in Kinshasa/Gombe, Democratic Republic of the Congo, represented by its Governor, hereinafter referred to as the "Central Bank", on the one hand;

AND

The authorized banks having their registered offices in the Democratic Republic of the Congo, each represented by its (their) statutory representative(s), on the other hand;

IT HAS BEEN PREVIOUSLY EXPOSED AS FOLLOWS:

Whereas one of the essential missions of the Central Bank is the promotion of the proper functioning of clearing and payment systems in accordance with Article 6 of Law No. 005/2002 of May 7, 2002, relating to the constitution, organization, and functioning of the Central Bank;

Whereas, to achieve this mission, the Central Bank has initiated the computerization of interbank clearing and settlement operations;

Whereas the Statutes and Regulations of 1970 governing the Clearing House contain numerous gaps and thus require a overhaul of the provisions contained therein to adapt them to technological and legal evolution;

Whereas the parties agree to work in the tele-clearing system, through which multilateral clearing operations are carried out without the physical presence of clerks assigned to clearing operations;

Whereas the computerization of interbank clearing and settlement operations consists of the electronic transcription of payment orders and their exchange, for their clearing and settlement, through an automated system managed by the Central Bank;

Whereas, in the event of a malfunction of the automated interbank clearing and settlement system, clearing operations will be carried out through the manual system;

Whereas, in accordance with Articles 1 and 36 of Law No. 003/2002 of February 2, 2002, relating to the activity and supervision of credit institutions, the Central Bank supervises and controls credit institutions and their operations;

Whereas the Central Bank had opened several accounts in favor of authorized banks, resulting notably in: (i) high fees and long delays for the transfer of funds from one provincial entity to another; (ii) untimely refinancing of an authorized bank; (iii) delays in the closing of accounting days and in the preparation of final statistics;

Whereas it is necessary to unify the current accounts of authorized banks to remedy all these inconveniences;

Whereas the members agree to secure clearing through new technological and legal methods;

Whereas legally formed conventions stand as law for those who have made them; they can only be revoked by mutual consent or for causes authorized by law. They must be executed in good faith;

Whereas conventions oblige the parties not only to what is expressed therein but also to all consequences that equity, usage, or law give to the obligation according to its nature;

Whereas any arrangement concluded in accordance with the law produces effects binding on the co-contractors and that third parties benefit from the effects of conventions concluded between the parties only in certain cases, notably in matters of payment for the benefit of a third party;

Whereas of the favorable opinion of the Congolese Bank Association;

Considering that the signatory members of this Convention agree to computerize interbank clearing and settlement operations.

IT HAS BEEN AGREED AND DETERMINED AS FOLLOWS:

Article 1: Object of the Convention

This Convention sets the rules applicable regarding:

• the clearing and settlement of claims that the parties hold against each other;
• the unification of accounts of authorized banks;
• payment operations admitted for clearing;
• the conditions for participation in interbank clearing and settlement operations;
• the automation of interbank clearing and settlement operations;
• the standards for automated transmission and exchange of digitized payment instruments through the automated interbank clearing and settlement system;
• the management of the automated interbank clearing and settlement system;
• the protection of the interbank clearing and settlement system and the management of payment incidents.

Article 2: Definitions

For the purposes of this Convention, the following terms are understood as:

a) Settlement Account: Current account opened in the books of the Central Bank by a participant for the settlement of operations admitted to interbank clearing.

b) Authentication Account: Algorithm allowing a participant's clerk to access the automated interbank clearing and settlement system in a personalized manner. This account consists of a user code (User ID) and an encrypted alphanumeric access code (password).

c) Malfunction: Any difficulty, defect, or failure of the computer platform operated or used by the Central Bank or any other event that makes it impossible to transmit, execute, or conclude, on the same day of processing, payment orders in the automated interbank clearing and settlement system.

d) Force Majeure: The following irresistible and unpredictable events are considered cases of force majeure under this Convention: riot, uprising, fire, flood, storm, explosion, natural disaster, war, acts of state, acts of civil or military authorities, earthquake, disruptions in data traffic originating from or destined for the clearing and settlement system, or any other cause independent of the reasonable will of the participant in question.

e) Central Bank Instruction: Instruction from the Central Bank of the Congo addressed to authorized banks.

f) Payment Instrument: All payment instruments that, regardless of the medium or technical process used, allow a person to transfer or receive funds.

g) Multilateral Clearing Operation: Conversion of claims held by the participants in this Convention against each other into a single claim due to one of them.

h) Payment Order: Instruction by the drawer to the drawee for the payment of a sum of money to the benefit of a payee or the transfer of funds.

i) Participants: Central Bank and authorized banks.

j) Computer Platform:

k) Tele-clearing: Computer system that ensures the exchange in digitized form of values admitted to clearing and the associated payment proof instruments.

Article 3: Clearing and settlement of claims between parties

The parties, hereinafter referred to as "participants", agree to the extinction by clearing of their respective debts up to their respective shares, so as to generate, at the close of the day, a debit or credit balance that impacts the settlement account of the participant opened in the books of the Central Bank.

Article 4: Unification of accounts

The national currency current accounts opened by authorized banks in the books of the Central Bank, in Kinshasa or in the provinces, form a single account called the non-interest-bearing settlement account.

By virtue of this unification, payment orders presented by a branch of a commercial bank are deemed to be presented for payment by that bank in Kinshasa.

Article 5: Operations admitted for clearing

The following national currency operations are admitted for clearing:

• treasury operations of the participants;
• payment of the equivalent in Congolese francs of foreign exchange operations;
• refinancing of authorized banks;
• subscription and repayment operations of treasury bills.

Article 6: Settlement of operations admitted for clearing

Operations that participants issue or receive for their own account or for third-party accounts are charged to their settlement accounts in the books of the Central Bank.

In its capacity as settlement agent, the Central Bank is mandated to debit and/or credit the settlement accounts of participants with clearing balances in accordance with the provisions of Article 10, paragraph 3 of this Convention.

Article 7: Participation in interbank clearing and settlement operations

This Convention is open to the Central Bank and authorized banks whose registered offices are established in the Democratic Republic of the Congo as participants. In this capacity, they directly issue and receive digitized payment orders for clearing via the automated interbank clearing and settlement system.

Participants pay the fees related to the management of the automated interbank clearing and settlement system in accordance with the Tariffs and Conditions of the Central Bank's operations.

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Article 8: Automation of interbank clearing and settlement operations

Paragraph 1: Establishment of an automated clearing system

The Central Bank manages a computer platform dedicated to interbank clearing and settlement, the functionalities of which allow:

a) the transmission of digitized payment orders between participants;

b) the clearing of claims and debts reported in these payment orders;

c) the automated settlement of net balances.

Paragraph 2: Issuance and receipt of digitized payment orders

Within the framework of this Convention, participants agree to issue and receive payment orders in dematerialized form, by transcribing the information contained in payment instruments onto a computer medium provided by the automated interbank clearing and settlement system.

Unless opposition or a judicial decision, operations initiated in the automated interbank clearing and settlement system are irrevocable.

For the participant issuer, this irrevocability is presumed as soon as the transmission made is acknowledged by the automated interbank clearing and settlement system. At that moment, it can no longer withdraw or modify the transmitted message.

For the participant recipient, this irrevocability applies to its payment obligation when, following the notification of a remittance by the automated interbank clearing and settlement system, it does not effect any refusal within a period of two business days from the date of notification.

Paragraph 3: Exchange of physical documents

To allow, in parallel with automation, a physical exchange of payment instruments admitted for clearing, mailboxes are arranged for each participant at the various operating sites of the Central Bank and in the branches of authorized banks that have received delegation from the mission of the State Cashier.

Clerks of participants deposit in these mailboxes the documents related to operations cleared during the day, destined for the concerned participants. These documents are attached to delivery slips.

A clerk from the Central Bank ensures, against acknowledgment of receipt, the effective deposit of physical documents in the boxes.

Delivery slips are established in 3 copies:

a) the first for acknowledgment of receipt by the recipient using stamps bearing the mention "clearing" followed by the designation of the concerned participant;

b) the second accompanies the payment instruments admitted for clearing;

c) the third is intended for the Central Bank for filing.

Paragraph 4: The liquidation sheet

The liquidation sheet retraces the operations performed by a participant and per session during a day.

It comprises two parts:

• the "Credit" part: records all credit notices presented and debit notices received.
• the "Debit" part: records all debit notices presented and credit notices received.

Cleared values and the number of attached documents are entered on the liquidation sheet in the "Debit" and "Credit" columns opposite the names of the concerned participants.

Article 9: Management of the automated interbank clearing and settlement system

Paragraph 1: Provision of computer services for clearing and settlement

The computer platform for clearing and settlement is the property of the Central Bank, which ensures its harmonious and continuous proper functioning.

Within the framework of this Convention, the Central Bank is a provider of computer services related to the operation and management of the computer platform. In this capacity, it offers secure Internet access to participants to this platform in accordance with the provisions of Article 11 of this Convention, and a technical manual defines the access protocols related thereto.

This manual also specifies the backup solution applicable in the event of a malfunction of the automated interbank clearing and settlement system.

Paragraph 2: Liability of the Central Bank as manager of the automated interbank clearing and settlement system

The Central Bank uses all reasonable means at its disposal to execute its obligations and guarantees the result. Its liability is limited to direct damages likely to result from any malfunction of the computer platform.

The Central Bank assumes no liability in the event of a malfunction on the part of the Internet connection governed by an agreement between an Internet service provider and the concerned participant. Such malfunctions are reported to it without delay.

Paragraph 3: Dissemination of information

The Central Bank disseminates, in particular to participants, all information on statistics of payment operations and on the management of the platform.

Participants can consult online, free of charge, the movements performed on their settlement accounts or request, against payment of related fees, a printed statement of such movements.

Article 10: Execution of interbank clearing and settlement operations

Paragraph 1: Sessions

Clearing and settlement operations only take place on business days and follow exchange time slots called sessions as follows:

• the first session is intended for the clearing of payment orders, the repayment of treasury bills, and the settlement of clearing balances;
• the second session is intended for covering the debit positions of settlement accounts at the end of the first session;
• the third session is dedicated to the subscription operations of treasury bills.

Paragraph 2: Preliminary verification of payment instruments

Each participant is responsible for the formal regularity of the payment instruments it presents for clearing.

To this end, it takes appropriate measures so that its clerks assigned to clearing carry out the necessary controls on any check, bill of exchange, payment order, promissory note, or any other payment instrument so as to avoid that the order they introduce into the automated interbank clearing and settlement system is subject to contestation or rejection.

It is understood within the framework of this Convention that payment instruments must be validly signed in accordance with the authorized signatures register. They must be perfectly legible in all their parts and established in such a way as to avoid any addition; they cannot be crossed out or overwritten.

Following this verification, a debit and/or credit notice is established based on such payment orders to be presented for clearing. These notices, duly signed by authorized persons, are digitized according to the format required in the tele-clearing user manual and contain in attachment, in digitized form, the payment instruments used for their establishment.

Paragraph 3: Conduct of the 1st session

To allow better coordination of clearing operations, digitized debit and/or credit notices must be transmitted each business day between 9:30 AM and 11:30 AM, Kinshasa time.

The debit and/or credit notices as well as other documents are digitized and transmitted via the automated interbank clearing and settlement system.

Clearing balances are charged by the Central Bank to the settlement accounts of the concerned participants.

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Paragraph 4: Conduct of the 2nd session

This session takes place between 12:00 PM and 1:30 PM, Kinshasa time.

When, at the end of the clearing and settlement session provided for in the previous paragraph, the clearing balance is debit, the concerned participant replenishes its provision accordingly, within the above time slot, through a loan, either from an authorized bank or from the Central Bank's money market in accordance with the provisions of Instruction No. 4 of March 27, 2008 to banks.

Loan requests for refinancing addressed to a commercial bank are transmitted and exchanged through the automated interbank clearing and settlement system accompanied by a digitized document duly signed for this purpose.

The validation of the loan grant by the participant lender is transmitted by the same means accompanied by a digitized aval duly signed for this purpose.

Copies of the originals of the loan request and the aval are deposited at the Central Bank at the close of the accounting day.

Paragraph 5: Conduct of the 3rd session

The third session is dedicated to the subscription operation of public securities by participants in accordance with Instruction No. 20 of March 27, 2008 relating to the issuance by auction of treasury bills.

This session is held between 9:30 AM and 1:00 PM Kinshasa time, on the business day fixed by the Central Bank.

Subscriptions of securities via the automated interbank clearing and settlement system must be accompanied by duly signed and digitized documents.

At the end of the counting and validation procedure of subscriptions, the amounts of the accepted subscriptions are debited automatically from the settlement accounts of the subscribing participants. The debit notices as well as other documents of the auction are digitized and transmitted as attachments to the concerned participants.

# Article 11: Protection of the automated interbank clearing and settlement system

## Paragraph 1: Secure authentication account

To allow the security of operations carried out through the automated interbank clearing and settlement system, access to this system is carried out using an identification code of the representatives of **participants** assigned to clearing and settlement operations in Kinshasa and in the provinces.

**Participants** are solely responsible for the confidentiality of such accounts and guarantee that they will put in place appropriate procedures to protect the computer platform against unauthorized access and use.

## Paragraph 2: Sanctions for breaches committed by participants

Without prejudice to sanctions provided for by specific texts, in the event of a breach by a **participant** of any of its obligations, the Central Bank may, depending on the case, summon it to comply with said obligations within a deadline it sets based on the nature of the breach in question or apply a financial indemnity whose amount is provided for in the Tariffs and Conditions of the Central Bank's operations.

When no favorable follow-up is given to this summons, the Central Bank may pronounce the temporary suspension of access to the platform or a financial indemnity until compliance with said obligations, which must imperatively take place within a deadline fixed based on the nature of the breach in question.

Any subscribing **participant** not having sufficient provision at the settlement date to cover the accepted subscriptions is subject to the sanctions provided for by the provisions of Article 18 of Instruction No. 20 of March 27, 2008 relating to the issuance by auction of treasury bills.

The payment incident and the sanction imposed on its author will be published by the Central Bank in an announcement following Article 19 of the aforementioned instruction.

In execution of the financial indemnities at their charge, the settlement accounts of the concerned **participants** are automatically debited with the amounts of the financial indemnity pronounced by the Central Bank.

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When the financial situation of a **participant** or indirectly deteriorates and leads to its insolvency, the Central Bank pronounces, if necessary, its **suspension** of interbank clearing and settlement operations. It informs the other **participants** without delay.

In the event of a breach endangering the continuity or security of exchanges or in the absence for the concerned participant of having complied with its obligations under this Convention, the Central Bank pronounces its **permanent exclusion** from its participation in interbank clearing and settlement operations, without prejudice to the liability of the excluded participant to repair the damage it has caused.

The **participant** excluded can only be readmitted if the following conditions are met:

- the regularization of the breaches that led to the exclusion;
- the presentation of sufficient guarantees to cover its net debit position in clearing.

Any **participant** whose dissolution is pronounced is automatically excluded from interbank clearing and settlement operations.

Consequently, the Central Bank proceeds to a stop of operations initiated through the automated interbank clearing and settlement system for the account of the excluded participant. However, clearing balances settled until the end of the day of exclusion remain irrevocable.

The exclusion of a **participant** does not lead to the refund of paid charges or participation fees.

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All operations initiated by the **excluded participant** are rejected from the date of exclusion.

## Paragraph 3: Provision of Guarantees

In accordance with the provisions of Articles 323, 326, and 329 of Law No. 73-021 of July 20, 197, on the general regime of property, land and real estate regime, and the regime of securities, the settlement accounts of **participants** are pledged to guarantee the daily settlement of their payment operations admitted for clearing. To this end, the Central Bank is constituted as a pledgee creditor of the settlement accounts opened in its books.

Without prejudice to the pledging of settlement accounts, interbank credit or refinancing operations within the framework of the money market are covered by a security in accordance with the provisions of

Instructions Nos. 4 and 6 relating to money market operations and effects eligible for refinancing operations of the Central Bank.

### Paragraph 4: Proof of Operations

Regardless of the means of proof admitted by legal texts, the proof of the execution of clearing operations provided for by this Convention is governed by the following provisions.

Receipt is deemed to have taken place as soon as messages intended for the receiving participant have been entrusted to the computer platform, even if this participant only becomes aware of them with delay, the timestamp of the Central Bank's computer platform being authoritative.

Messages archived on electronic or paper support, kept by the Central Bank, are accepted as means of proof of payments processed by the Central Bank's computer platform. Similarly, the books and accounts of the Central Bank, whatever their format of recording or establishment, are accepted as means of proof relating to any obligations of participants and any fact or event invoked by a participant.

In the event of a dispute regarding the supports of operations admitted for clearing, physical documents retain their full probative value over scanned images.

In the event of a dispute regarding the information provided by messages archived by the Central Bank, a third-party expertise designated by common agreement is resorted to in order to determine the reality of operations carried out via the automated interbank clearing and settlement system.

### Paragraph 5: Conservation of Documents

Without prejudice to the period provided by law, the Central Bank ensures the conservation, without modification, of data exchanged through the automated interbank clearing and settlement system.

Archived data determine the origin and destination of exchanged messages as well as all date and time indications of the sending or receipt of such messages.

### Paragraph 6: Liability of Participants

Any participant is responsible for the operations it transmits, both for its own account and for the account of third parties.

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Without prejudice to the diligence provided for in the article above, each participant ensures the settlement of its operations at the times provided for in the time slots of this Convention and, particularly, it is desirable to ensure this settlement as soon as possible in order to ensure the fluidity of the system even if operations can be settled up to the time of the provisional accounting cutoff at 6:00 PM, Kinshasa time.

Any participant is obliged to report to the Central Bank any anomaly observed following the reconciliation carried out between its position and that disseminated by the Central Bank.

## Article 12: Management of Payment Incidents

### Paragraph 1: Rejection of Operations

Computerized payment orders that do not meet the conditions of their validity in accordance with the standards provided for by this Convention cannot be admitted for clearing. In this case, presenting participants must be notified in writing by their counterparty, on the same day, of their rejection. The payment instruments relating thereto are returned without delay to their drawers.

A statement and a stamped and initialed copy of all rejected payment means are transmitted to the Central Bank within the same timeframe.

### Paragraph 2: Notion of Payment Incident

The following are considered payment incidents in particular:

- issuance of a check and effect without funds or with insufficient funds;
- falsification of payment means;
- opposition on account;
- duplicate operation;
- fraudulent operations;
- presumption of fraud on the payment means;
- opposition on the payment means;
- expired payment means;
- non-conforming signature;
- absence of a mandatory mention;
- lack of consistency between amounts in figures and in letters;
- failure to repay a credit at maturity;
- irregular endorsement;
- payment means overwritten or crossed out;
- any malfunction of the information system or any other fact likely to have an impact on clearing operations;
- undated or unsigned title;

- absence of the currency symbol;
- blocked account;
- opposition on account;
- discrepancy between the number and the title of the account.

**Article 13: Miscellaneous Provisions**

**Paragraph 1: Duration and Entry into Force**

This Convention is concluded for an indefinite duration and enters into force upon its signature by all participants.

**Paragraph 2: Modification of this Convention**

This Convention may be modified at the initiative of any participant. Amendments can only enter into force when they have received the agreement of all participants.

**Paragraph 3: Confidentiality**

The parties are bound by secrecy regarding all information they may have knowledge of within the framework of this Convention.

However, this disclosure is permitted in the following cases:
- the application of legal provisions authorizing this disclosure;
- the execution of judicial proceedings in which one of the participants asserts its rights;
- the execution of a requisition by the tax administration.

**Paragraph 4: Suspension of Liability**

Within the six months following the entry into force of this Convention, the interbank clearing and settlement computer platform is deemed to be in test mode.

To this end, the liability incurred by the Central Bank within the framework of this Convention cannot be enforced within the six months following the entry into force of this Convention.

**Paragraph 5: Force Majeure**

Within the framework of this Convention, the parties will not be held responsible for any failure or delay in the execution of their obligations caused by a case of force majeure.

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**Paragraph 6: Settlement of Disputes**

A Conciliation Committee composed of three representatives of the Central Bank, including one secretary without voting rights, and three representatives of authorized banks designated is established.

Excluding cases where the Central Bank exercises its mission of monitoring the proper functioning of the interbank clearing and settlement system, any dispute relating to the interpretation and execution of this Convention will, failing an amicable arrangement before this Committee, be submitted to arbitration.

**Paragraph 7: Conciliation Procedure**

For the purpose of amicable settlement, the claimant notifies by registered letter with acknowledgment of receipt to each of the participants it deems concerned by the nature of its claims, presenting the elements of the complaint.

The Committee meets within a maximum period of one week from the notification in order to seek an amicable solution to the dispute. This solution is recorded in a written document signed by all representatives.

During the conciliation session, representatives belonging to one of the participants party to the dispute cannot be part of this Committee.

The presidency and secretariat of the Conciliation Committee are ensured by the Central Bank.

**Article 12: Final Provisions**

This Convention is governed by Congolese law. It repeals all previous provisions contrary to it and enters into force on the date of its signature.

In witness whereof, this Convention has been signed in as many copies, of which each commercial bank and the Central Bank receive one copy.

Made in Kinshasa, on

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**For the Central Bank**

J-C. MASANGU MULONGO

**For authorized banks**

1. ACCESS BANK
2. ADVANS BANQUE CONGO
3. AFRILAND FIRST BANK CD
4. BANK OF AFRICA (BOA)
5. BANQUE COMMERCIALE DU CONGO (BCDC)
6. BANQUE INTERNATIONALE DE CREDIT (BIC)
7. BANQUE INTERNATIONALE POUR L'AFRIQUE AU CONGO (BIAC)
8. BGFI BANK
9. BYBLOS BANQUE
10. CITIGROUP GONGO

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11. ECOBANK
12. FIBANK
13. INVEST BANK CONGO
14. MINING BANK OF CONGO
15. PROCREDIT BANK
16. RAWBANK
17. SOFIBANQUE
18. STANDARD BANK RDC
19. TRUST MERCHANT BANK
20. UNITED BANK FOR AFRICA