Instruction on the Constitution of Mandatory Reserves for Credit Institutions in the 'Bank' Category

Conakry, August 24, 2018

REPUBLIC OF GUINEA CENTRAL BANK

INSTRUCTION DGCC/DPMC/ N°..08..ON THE CONSTITUTION OF MANDATORY RESERVES FOR CREDIT INSTITUTIONS IN THE 'BANK' CATEGORY

THE GOVERNOR

Having regard to Law L/2017/017/AN of June 08, 2017, repealing Law L/2016/064/AN of July 09, 2016, repealing Law L/2014/064/AN of November 09, 2016, itself amending Law L/2014/016/AN of July 02, 2014, on the Statutes of the Central Bank of the Republic of Guinea;

Having regard to Law L/2013/060/AN of August 12, 2013, on the regulation of credit institutions in the Republic of Guinea;

Having regard to Decree n°D/2010/PRG/SGG of December 27, 2010, appointing the Governor;

Having regard to Instruction n°005/DGCCh/DPMC/2005 of October 24, 2005, on the constitution of mandatory reserves for credit institutions in the 'Bank' category

DECIDES

Article 1: Credit institutions in the 'Bank' category referred to in Law L/2013/060/AN of August 12, 2013, on the Regulation of Credit Institutions in the Republic of Guinea, are required to constitute, in the form of non-remunerated deposits with the Central Bank of the Republic of Guinea and under the conditions provided for in Article 6 of this instruction, a minimum amount of mandatory reserves on their deposits denominated in Guinean francs and in foreign currencies.

Article 2: Mandatory reserves apply to deposits of all types in Guinean francs and foreign currencies recorded in the accounts of residents and non-residents, with the exception of operations with credit institutions referred to in Article 1, namely:

1. The elements to be included in the reserve base are extracted from the accounting records of head offices and branches established in Guinea.

P.O. Box N° 692 - Conakry - Telephone: (+224) 664 77 77 77 - E-mail: secretariat.gouv@bcrg-guinee.org Website: www.bcrg-guinee.org / 12 Boulevard du Commerce C/Kaloum

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2. The reserve calculation base consists of the average of deposits from the previous period calculated by the subject institutions.

Article 3: The mandatory reserve rate applicable to deposits is set at sixteen percent (16%).

Article 4: Within a maximum period of five calendar days before the end of the current period, credit institutions must send to the Central Bank a specific declaration showing the results of the calculation of the mandatory reserve base for the following period.

In the absence of declarations within this period, the calculation will be carried out on the basis of the elements of the previous declaration increased by 10%.

As such, the calculation elements must appear on the following annexed statements:

-sheet N°1 Public and private sector deposits in GNF -sheet N°2 Mandatory Reserves on deposits in GNF

• sheet N°3 Public and private sector deposits in foreign currencies
• sheet N°4 Mandatory Reserves on deposits in foreign currencies

Credit institutions must submit the calculation annexes for their mandatory reserves in paper format and as an Excel file by email to the Monetary Policy and Credit Directorate.

Article 5: The period for constituting Mandatory Reserves is set at four calendar weeks according to a calendar that will be communicated to banks no later than December 15 of each year for the following year.

The period for constituting mandatory reserves is that which immediately follows the period used as a reference for the reserve calculation base.

Article 6: Reserves are constituted by the credit balances observed each working day of the current period, of the settlement accounts of the credit institutions referred to in Article 1 held in the RTGS system of the Central Bank.

The average amount of daily balances calculated according to the number of days in the period must be at least equal to the amount of required reserves.

The mandatory reserves of credit institutions in the 'bank' category calculated on GNF deposits are constituted in GNF, and those calculated on foreign currency deposits are constituted in foreign currencies.

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Article 7: Credit institutions referred to in Article 1 that have not complied with the prescribed minimum reserves during a period are liable for late payment interest calculated based on the observed shortfall and counted over the number of days in the period.

The rate of this late payment interest is set at eight (8) points above the Central Bank's overnight repo rate (TPO).

Any repeated failure to constitute mandatory reserves during two consecutive periods exposes the offending institution to an increase of two (2) percentage points in the late payment interest rate, without prejudice to the disciplinary sanctions provided for in the Banking Law.

Article 8: The application of late payment interest and penalties provided for in Article 7 will be carried out by automatic debit from the settlement account of the defaulting bank held at the Central Bank.

Article 9: The Central Bank may, in particular circumstances, authorize an institution to temporarily derogate from the provisions of this instruction and grant it a period to regularize its situation.

Article 10: This Instruction, which cancels and replaces Instruction n°005/DGCCh/DPMC/2005 of October 24, 2005, takes effect from its date of signature and will be published wherever necessary.

[Signature/Stamp]

Dr. Louncény NABE