Directions for Setting Aside Reserves against Re-deposits of Community Financial Institutions

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Title：

Directions for Setting Aside Reserves against Re-deposits of Community Financial Institutions

Announced Date： May 07, 1984

Amended Date： Amended on December 01, 2021; effective from January 01, 2022

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(Purpose of prescription)

2. These Directions are prescribed by the Central Bank of the Republic of China (Taiwan) (hereinafter referred to as "the Bank") to clearly stipulate the reserves set aside against re-deposits made by community financial institutions at agricultural banks and other relevant matters to be complied with.

(Definitions)

3. The terms used in these Directions shall be defined as follows:

(1) "Community financial institutions" shall mean credit cooperatives and credit departments of farmers' and fishermen's associations.

(2) "Trustee institutions" shall mean institutions entrusted by the Bank to receive and keep reserves of community financial institutions, i.e., Taiwan Cooperative Bank or designated branches of the aforesaid bank.

(3) "Agricultural banks" shall mean Taiwan Cooperative Bank, Land Bank of Taiwan, and Agricultural Bank of Taiwan.

(4) "Re-deposits" shall mean fixed-term deposits accepted by community financial institutions that are re-deposited at banks in the form of fixed-term deposits.

(Required reserves against re-deposits of credit cooperatives)

4. The reserves against re-deposits of credit cooperatives shall be set aside in the following manner:

(1) For re-deposits made by credit cooperatives at Taiwan Cooperative Bank pursuant to Article 3 of the Regulations for Funds to be Re-Deposited by and Accommodated to the Credit Cooperatives, the credit cooperatives are exempted from reserve requirements, and the required reserves shall be set aside by Taiwan Cooperative Bank instead.

(2) For re-deposits other than those referred to in the preceding subparagraph, the credit cooperatives shall set aside reserves themselves.

(Required reserves against re-deposits of credit departments of farmers' and fishermen's associations)

5. The reserves against re-deposits of credit departments of farmers' and fishermen's associations shall be set aside in the following manner:

(1) For re-deposits that meet the following conditions, the reserves shall be set aside by the agricultural banks that accept the re-deposits, whereas the credit departments of farmers' and fishermen's associations are exempted from reserve requirements:

i. Term of deposit: One year or less.

ii. Interest rate: The posted interest rates of the agricultural banks that accept the re-deposits.

iii. Amount limit: The amounts of re-deposits from time deposits and time savings deposits shall not exceed the amounts of the underlying time deposits and time savings deposits, respectively.

(2) For re-deposits other than those referred to in the preceding subparagraph, credit departments of farmers' and fishermen's associations shall set aside reserves themselves.

(Reports to be filed by community financial institutions)

6. Community financial institutions shall, during the reserve adjustment period, submit a "Report for Re-deposits Exempt from Reserve Requirements" (Form 1), together with the "Reserve Adjustment Form – Current Period," to the relevant trustee institutions for audit. Community financial institutions that fail to submit the aforementioned reports in a timely manner shall be deemed to have not made any re-deposit and shall be required to set aside reserves based on the total amount of each type of deposits they have accepted.

(Reports to be filed by agricultural banks and deadlines therefor)

7. Agricultural banks that accept re-deposits shall, by type of community financial institution, submit the "Monthly Report for Re-deposits of Community Financial Institutions" (Form 2-1 and Form 2-2) to the relevant trustee institutions for verification within four business days after the end of each month.

(Adjustment and audit of reserves set aside by community financial institutions and collection of interest by trustee institutions)

8. If the data on re-deposits reported by a community financial institution are inconsistent with those reported by agricultural banks, the trustee institution may first make adjustments based on the data reported by the community financial institution.

The trustee institution shall find out the causes of discrepancy mentioned in the preceding paragraph. If it is found that the discrepancy results from data-reporting error(s) of the community financial institution, and the error(s) cannot be corrected within the current period, which cause(s) the shortfall of reserves, the trustee institution shall charge the community financial institution penalty interest on the shortfall at 1.5 times the short-term accommodation interest rate of the Bank.

(Reports to be filed by trustee institutions and deadlines therefor)

9. Trustee institutions shall, on a monthly basis, submit a "Summary Report for Re-Deposits of Community Financial Institutions Exempt from Reserve Requirements" (Form 3), together with the "Reserve Adjustment Form – Current Period," to the Bank's Department of Banking within the reserve adjustment period.