Regulatory Alerts2018-11-27
Instruction No. 18/2018, of November 28
The National Bank of Angola mandates commercial banks to convert retail credit originally denominated in foreign currency into national currency, requiring proactive client notification and written disclosure of applicable terms, interest rates, and repayment periods. Banks must ensure fair negotiations, refrain from charging conversion commissions, and submit required foreign exchange needs to the central bank via a designated Excel schedule. All credit conversion processes must be finalized within six months of publication, with non-compliance constituting a punishable misdemeanor under financial institution laws.
INSTRUCTION NO. 18/2018 of November 28 SUBJECT: FINANCIAL SYSTEM
- Conversion of Credits Granted in Foreign Currency to Individuals
Having registered interest from individual clients and Commercial Banks in converting contracted credit denominated in foreign currency to national currency; Having the need to strengthen relations between said Commercial Banks and their clients, as an indispensable element for confidence, efficiency, and effectiveness of the Financial System, under Notice No. 11/2014, dated December 17, regarding specific requirements for credit operations; In accordance with the combined provisions of items d) and f) of paragraph 1 of Article 21.º and paragraph 1 of Article 51.º, both of Law No. 16/10, dated July 15, Law of the National Bank of Angola, combined with Article 94.º of Law No. 12/2015, dated June 17, Law of the Bases of Financial Institutions.
I HEREBY DETERMINE:
- Object and Scope This Instruction establishes the rules that Commercial Banks, hereinafter referred to as Banks, must observe in the processes of converting credits granted in foreign currency to national currency.
- Credit Conversion 2.1 Banks may convert credits, from their individual clients, granted in foreign currency to national currency.
CONTINUATION OF INSTRUCTION NO. 18/2018 Page 2 of 4 2.2 Following consensual negotiation, Banks must proactively inform interested clients of the possibility to convert their contracted credits denominated in foreign currency to national currency. 2.3 In credit conversion operations, Banks must present interested parties, in writing, at minimum, the following information: a) The terms and conditions applicable to national currency credits resulting from conversion; and, b) The capital installment amount, interest rate, and term, respecting the prevailing pricing schedule of the institution. 2.4 In credit convertibility, Banks must act fairly and transparently in negotiations with their clients, refraining from performing acts constituting financial abuses. 3. Shaping of the Conversion Process 3.1 Following the credit conversion agreement, Banks must proceed with adjusting the documentation and other procedures necessary for shaping said process. 3.2 Banks that do not have a sufficiently long foreign exchange position to cover the sale of foreign currency regarding the client's credit must include in their needs schedules the amounts necessary for said conversion, ensuring that the National Bank of Angola provides the foreign currency sale for this purpose. 3.3 For purposes of the aforementioned provision, Banks must complete the schedule attached to this Instruction, which shall be sent in Excel format via email to dma@bna.ao. 3.4 The sale of foreign currency to cover credits declared in the aforementioned schedule depends on confirmation of their registration in the Credit Information and Risk Center (CIRC). 3.5 Whenever the National Bank of Angola is requested to make foreign currency available, Banks must proceed with credit conversion within 10 (ten) days, counting from the date of availability of said currency.
CONTINUATION OF INSTRUCTION NO. 18/2018 Page 3 of 4 3.6 Banks are prohibited from charging any commissions related to credit conversion to their individual clients. 4. Final and Transitional Provisions Banks must conclude the credit conversion processes for clients within a maximum period of 6 (six) months, counting from the date of publication of this Instruction. 5. Infractions Non-compliance with the provisions contained in this Instruction constitutes a misdemeanor punishable under Law No. 12/2015 of June 17, Law of the Bases of Financial Institutions. 6. Doubts and Omissions Doubts and omissions resulting from the interpretation and application of this Instruction are resolved by the National Bank of Angola. 7. Entry into Force This Instruction enters into force on the date of its publication. PUBLISHED. Luanda, November 28, 2018. THE GOVERNOR JOSÉ DE LIMA MASSANO