Directions for Handling Legally Required Reserves against Re-deposited Deposits of Grassroots Financial Institutions

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Directions for Handling Legally Required Reserves against Re-deposited Deposits of Grassroots Financial Institutions

Inactive Regulations

Announced Date： May 07, 1984

Amended Date： June 03, 2005

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1.

1. Definitions

(1)The term "Grassroots Financial Institutions" as referred to in these Directions shall mean the credit cooperatives, credit departments of farmers' associations or fishermen's associations.

(2)The term "Trustee Institutions" as referred to in these Directions shall mean institutions entrusted by the Central Bank of the Republic of China (Taiwan) to receive legally required reserves (i.e. Taiwan Cooperative Bank or designated branches of Taiwan Cooperative Bank).

(3)The term "Agricultural Banks" as referred to in these Directions shall mean Taiwan Cooperative Bank, the Farmers Bank of China, Land Bank of Taiwan and Agricultural Bank of Taiwan.

(4)The term "Re-deposited Funds" as referred to in these Directions shall mean funds to be re-deposited, pursuant to laws and regulations, by Grassroots Financial Institutions on the time deposits they accept.

2.

2. Reserves against "Re-deposited Funds" of the credit cooperatives shall be calculated and handled in accordance with the following:

(1)For those "Re-deposited Funds" re-deposited with Taiwan Cooperative Bank by the credit cooperatives pursuant to Article 3 of the "Regulations for Funds to be Re-Deposited by and Accommodated to the Credit Cooperatives" as promulgated by the Central Bank of the Republic of China (Taiwan) , the said credit cooperatives shall be exempted from reserve requirements, which shall be set aside by Taiwan Cooperative Bank.

(2)Other than for those "Re-deposited Funds" referred to in the preceding Subparagraph, the credit cooperatives shall set aside legally required reserves themselves.

3.

3. Reserves against "Re-deposited Funds" of credit departments of farmers' associations or fishermen's associations shall be calculated and handled in accordance with the following:

(1) In the event that "Re-deposited Funds" are re-deposited in Agricultural Banks by credit departments of farmers' associations or fishermen's associations in accordance with the following requirements, the said credit departments of farmers' associations or fishermen's associations shall be exempted from setting aside the legally required reserves, which shall be set aside by the Agricultural Bank accepting "Re-deposited Funds" :

i.Deposit Term: One year or less.

ii.Interest Rate: Posted interest rate of Agricultural Banks accepting "Re-deposited Funds".

iii.Amount Limit: The amount of Re-deposited Funds from time deposits shall not exceed the amount of the underlying time deposits. The amount of " Re-deposited Funds" from time savings deposits shall not exceed the amount of the underlying time saving deposits.

(2) Other than for those "Re-deposited Funds" referred to in the preceding Subparagraph, credit departments of farmers' associations or fishermen's associations shall set aside legally required reserves themselves.

4.

4. Grassroots Financial Institutions shall submit "Calculation Report for Re- eposited Funds Exempt from Reserve Requirements" (form 1 attached), together with "Legally Required Deposit Reserve Adjustment Form for The Current Period" within the prescribed period for adjustment of legally required reserves, to the relevant Trustee Institution for audit. Grassroots Financial Institutions, failing to periodically submit the above report and form, shall be deemed to have no "Re-deposited Funds" and shall calculate and set aside legally required reserves against each type of deposits themselves.

5.

5. Agricultural Banks accepting "Re-deposited Funds" shall submit the "Monthly Form for Re-deposited Funds of Grassroots Financial Institutions" (form 2 attached) to the relevant Trustee Institution for verification within four business days after the end of each month.

6.

6. If the contents of the "Re-deposited Funds" reported by the Grassroots Financial Institution were inconsistent with those reported by the Agricultural Bank, the "Trustee Institution" shall make adjustment based on the data reported by the Grassroots Financial Institution.

The "Trustee Institution" shall verify the causes of any inconsistency referred to in the preceding Paragraph. In the event that the data error made by the Grassroots Financial Institution can not be corrected within the current period, and results in insufficient legally required reserves being set aside by the "Trustee Institution" for the current period, the said Grassroots Financial Institution shall be charged penalty interest on the shortfall at one and half times the shortterm accommodation interest rate of the Central Bank of the Republic of China (Taiwan).

7.

7. The "Trustee Institution" shall, on a monthly basis, submit the "Consolidated Report of Re-Deposited Funds of Grassroots Financial Institutions Exempt from Reserve Requirements " (form 3 attached), together with the "Adjusted Forms for The Current Period" , to the Department of Banking of the Central Bank of the Republic of China (Taiwan) within the deadline of the adjustment period.