Regulation No. 04/19/CEMAC/UMAC/CM on the Global Effective Rate, Usury Repression, and Publication of Banking Conditions in CEMAC

ECONOMIC AND MONETARY COMMUNITY OF CENTRAL AFRICA

MONETARY UNION OF CENTRAL AFRICA

REGULATION NO. 04 / 19 / CEMAC / UMAC / CM ON THE GLOBAL EFFECTIVE RATE AND THE REPRESSION OF USURY AND THE PUBLICATION OF BANKING CONDITIONS IN CEMAC

THE MINISTERIAL COMMITTEE,

Having regard to the revised Treaty of the Economic and Monetary Community of Central Africa (CEMAC);

Having regard to the Convention governing the Monetary Union of Central Africa (UMAC);

Having regard to the Statutes of the Bank of Central African States (BEAC);

Having regard to the Convention of October 16, 1990, establishing a Central African Banking Commission, its Annex and subsequent texts;

Having regard to the Convention of January 17, 1992, on the harmonization of banking regulations in the Central African States, its Annex and subsequent texts;

Having regard to Regulation No. 02/15/CEMAC/UMAC/COBAC of March 27, 2015, amending and supplementing certain conditions relating to the exercise of the banking profession in the Economic and Monetary Community of Central Africa and its subsequent Regulations;

Having regard to Regulation No. 01/17/CEMAC/UMAC/COBAC of September 27, 2017, relating to the conditions for exercising and controlling microfinance activity in CEMAC;

Having regard to Regulation No. 04/18/CEMAC/UMAC/COBAC of December 21, 2018, relating to payment services in CEMAC;

Having regard to Regulation No. 03/2019/CEMAC/UMAC/CM of October 3, 2019, establishing, organizing and operating National Economic and Financial Committees in CEMAC;

Considering the Resolution by which the Board of Directors of the BEAC, at its session of December 19, 2018, prescribed the revision of the regulatory framework relating to the global effective rate and the repression of usury in order to create the conditions for a harmonious development of the credit market in CEMAC;

Considering the need to promote better access for CEMAC economic agents to bank credit and to protect consumers of financial services by promoting transparency, fairness and effective competition;

Considering the favorable opinion of the Monetary Policy Committee issued during its ordinary session of November 08, 2019, in Yaoundé, Republic of Cameroon;

After the concurring opinion of the Board of Directors of the BEAC, delivered during its ordinary session of December 19, 2019, in Douala, Republic of Cameroon;

On the proposal of the Governor of the BEAC;

Meeting in its ordinary session of December 20, 2019, in Douala, Republic of Cameroon;

UNANIMOUSLY ADOPTS THE FOLLOWING REGULATION:

TITLE I: GENERAL PROVISIONS

Article 1.- This Regulation defines the rules relating to the determination of the global effective rate of credit, the definition and repression of usury in CEMAC, as well as the publication of banking conditions and fees related to financial services.

Article 2.- For the purposes of this Regulation, the following definitions apply:

• BEAC or Central Bank: Bank of Central African States;
• CEMAC or Community: Economic and Monetary Community of Central Africa;
• COBAC or Banking Commission: Central African Banking Commission;
• Ministerial Committee: Ministerial Committee of the Central African Monetary Union;
• CNEF: National Economic and Financial Committee;
• CPM: Monetary Policy Committee;
• Subject institution: credit institution, microfinance institution, payment institution or any intermediary in banking operations that grants credits as a habitual profession within the meaning of banking regulations in CEMAC;
• Trustee: Judicial agent appointed in the context of collective debt settlement proceedings, on the one hand, to assist or represent the debtor and, on the other hand, to represent their creditors;
• TEG: global effective rate.

Article 3.- This Regulation applies to subject institutions as defined in Article 2. In addition to the subject institutions referred to in this article, the provisions relating to the repression of usury apply to natural or legal persons residing in one of the CEMAC member states.

TITLE II: PROVISIONS RELATING TO THE GLOBAL EFFECTIVE RATE OF CREDIT

Article 4.- The global effective rate of credit is the annual rate that measures the real cost of credit borne by the borrower. It is expressed as a percentage with an accuracy of two decimal places.

Article 5.- The annual global effective rate includes the following elements, determined all taxes included:

• interest calculated on the basis of the contractual nominal rate;
• administration fees;
• insurance premiums, linked to the establishment of the credit;
• where applicable, registration fees for the credit agreement;
• where applicable, fees for establishing collateral required by the subject institution;
• remuneration and fees paid or due to intermediaries in banking operations who intervened in the credit granting process, including when they correspond to actual disbursements;
• commissions or any other remuneration related to the granting of credit.

Article 6.- The following are not taken into account in the determination of the global effective rate of credit:

• fees and penalties payable by the borrower due to non-performance of their obligations under the credit agreement;
• fund transfer fees as well as fees related to maintaining an account intended to receive deductions made for the principal amortization of the loan, interest payments and other charges.

Article 7.- The global effective rate is determined for each credit before the conclusion of the related agreement, considering that it will remain in force for the fixed contractual period and that the lender and the borrower will fulfill their respective obligations within the agreed deadlines and dates.

In the case of a variable nominal rate credit or when the credit agreement includes clauses for revising the nominal rate, commissions or fees included in the determination of the general effective rate, this is calculated at the time of concluding the contract, considering that the nominal rate, commissions and fees remain fixed until the end of the contract. However, the global effective rate is recalculated at each modification of the credit agreement in accordance with the contractual stipulations.

The methods for calculating the global effective rate by type of credit are specified by Instruction of the Central Bank.

Article 8.- When opening an account with overdraft facility, the related agreement provides for an indicative global effective rate set on the day of its conclusion.

Article 9.- The subject institution communicates to the borrower, by any means leaving a written trace, prior to the signing of the credit agreement, the applicable TEG for the envisaged operation, specifying its different components in accordance with Article 4 of this Regulation. The revised TEG is also communicated to the borrower under the same conditions.

The duration of the credit, the TEG and its components are notified to the borrower, in writing in an official language of the State where the subject institution is located, in a clear and easily understandable form, at the time of concluding the credit agreement, including in the case of an overdraft facility.

Article 10.- The absence of written indication of the TEG or the indication of an erroneous TEG does not invalidate the credit contract or the interest stipulation.

The subject institution calculates and notifies the exact TEG of the credit to the borrower within seventy-two (72) hours following the discovery of the absence of written indication or the erroneous indication of the TEG.

In case of collection of sums higher than the applicable TEG, these are automatically charged against the nominal interest and, for the surplus, if any, against the principal of the claim. If the claim is extinguished in principal and interest, the sums unduly collected by the subject institution are returned to the borrower with interest, calculated on the basis of the BEAC key rate in force on the day they are actually paid.

Article 11.- Subject institutions periodically declare to the National Economic and Financial Committee (CNEF) of their country of establishment the TEGs applicable to all credits granted to their clientele.

The periodicity and modalities for declaring TEGs by subject institutions are specified by Instruction of the Central Bank.

Article 12.- The National Economic and Financial Committee is responsible for centralizing, in each CEMAC member state, the data and information relating to the TEG communicated to it by the subject institutions. It communicates them to the Central Bank for centralization at the CEMAC level.

Article 13.- The CNEF calculates and publishes, according to a periodicity and modalities fixed by Instruction of the Central Bank, the average TEGs, by category of loans and by type of borrowers, at the national level and for each subject institution.

The average TEGs calculated by the CNEFs are transmitted to the Central Bank, which approves them prior to their communication to the subject institutions and their publication.

Article 14.- The Central Bank calculates and publishes regional TEGs, according to a periodicity and modalities fixed by its Instruction.

TITLE III: PROVISIONS RELATING TO USURY

Article 15.- Constitutes a usurious loan any loan or any agreement concealing a loan, in any matter and by any person, at a TEG that exceeds, at the time it is granted, the usury rate fixed by the Monetary Policy Committee of the Central Bank.

Sales operations with payment facilities are assimilated to loans and are subject to the provisions of this Regulation.

Article 16.- The Monetary Policy Committee determines the usury rate for each type of subject institution, according to the categories of loans and the nature of the borrowers.

For loans granted by natural persons or legal persons other than subject institutions, the applicable usury rates are those fixed for credit institutions and for operations of the same nature involving similar risks.

The Central Bank specifies, after consulting the National Economic and Financial Committees, the categories of loans and borrowers according to which usury rates are differentiated.

Article 17.- The Monetary Policy Committee sets quarterly usury rates applicable in each CEMAC member state for the three months following the date of determination.

For each category of loans and borrowers, other than individuals, the usury rate applicable in each member state is equal to the national average TEG of the previous quarter, increased by a certain number of basis points determined by the Monetary Policy Committee.

For loans to individuals, the usury rate is set taking into account, in particular, market conditions and consumer protection issues.

Article 18.- The decision of the Monetary Policy Committee fixing the usury rates is published in the Official Bulletin of CEMAC, in the legal announcement journals of the member states and on the website of the Central Bank.

The BEAC notifies the decision of the Monetary Policy Committee to the CNEFs, which communicate them to the subject institutions.

Subject institutions display at their counters the usury rates fixed by the Monetary Policy Committee and publish them by any appropriate means.

Article 19.- The TEG of each loan is freely negotiated between the borrower and the lender, subject to compliance with the usury rate applicable to the concerned loan category.

To this end, lenders inform borrowers, by any means leaving a written trace, of the usury rates corresponding to the credits offered.

Article 20.- In the case of loans on commodities or other movable goods, and in sales or barter operations on credit, the value of the things delivered or the price paid by the debtor, in principal and accessory, may not exceed the value of the things received by an amount greater than that corresponding to the usury rate applicable to credit operations of the same nature involving similar risks.

This article does not apply to operations on securities or on financial products.

Article 21.- When a loan is usurious, the unduly collected sums are automatically charged against the nominal interest and, for the surplus, if any, against the principal of the claim.

If the claim is extinguished in principal and interest, the unduly collected sums are returned with legal interest calculated from the day they were paid.

TITLE IV: PROVISIONS RELATING TO BANKING CONDITIONS AND PRICES OF FINANCIAL SERVICES

Article 22.- For the purposes of this Regulation, banking conditions constitute all the tariff rules that subject institutions establish to govern operations with their clientele, including in exceptional situations. They include in particular:

• creditor and debtor rates applicable to operations with clientele;
• commissions collected by the subject institution in the context of its operations with clientele;
• fees and commissions collected on insurance services;
• fees related to various other services offered by the subject institution;
• reference thresholds for usurious interest rates;
• mandatory levies for the benefit of the State or public institutions.

Article 23.- Subject institutions publish quarterly and immediately after any modification, their banking conditions applicable to clientele by insertion in a legal announcement journal and by permanent display in their agencies, counters and website.

The models, formats and modalities for publishing banking conditions are determined by COBAC in consultation with the BEAC, the CNEFs and professional associations of subject institutions.

Article 24.- The National Economic and Financial Committee is responsible, in each CEMAC member state, for centralizing the banking conditions of subject institutions. To this end, subject institutions communicate quarterly and immediately after any modification, their banking conditions to the CNEF of their state of establishment.

The CNEF communicates the banking conditions of subject institutions to the BEAC and COBAC.

The CNEF publishes, on its website and in a legal announcement journal, comparative data relating to the banking conditions practiced by subject institutions.

The CNEF calculates and publishes, according to a periodicity and modalities defined by Instruction of the BEAC, a harmonized index of financial service prices for the country, based on the banking conditions data provided by subject institutions.

Article 25.- The BEAC ensures the regional centralization of the banking conditions of CEMAC subject institutions. It publishes, on its website, comparative data relating to the tariff conditions applied by CEMAC subject institutions.

The BEAC calculates and publishes a harmonized index of financial service prices for CEMAC, based on data provided by the CNEFs.

TITLE V: SANCTIONS APPLICABLE IN CASE OF NON-COMPLIANCE WITH PROVISIONS RELATING TO TEG, BANKING CONDITIONS AND MONITORING OF FINANCIAL SERVICE PRICES

Article 26.- Constitute non-compliance within the meaning of this Regulation, in particular:

• the absence of written indication of the TEG to the borrower;
• the indication of an erroneous TEG to the borrower;
• the failure to display banking conditions;
• non-compliance with deadlines for transmitting TEGs, banking conditions and information necessary for calculating the financial services price index to the National Economic and Financial Committee.

Article 27.- In case of non-compliance with the deadlines for periodic transmission of TEGs, banking conditions and information requested by the CNEF for the calculation of the financial services price index, the institution incurs penalties, the calculation methods of which are specified by Instruction of the BEAC.

Article 28.- In case of non-compliance with the obligation to provide written indication of the TEG to the borrower or indication of an erroneous TEG to the borrower, or the failure to display banking conditions, the institution incurs a pecuniary sanction of three million (3,000,000) CFA francs.

When the CNEF observes the non-compliance provided for in this article, prior to pronouncing the pecuniary sanction, it invites the offending subject institution to explain itself.

Article 29.- The CNEF notifies the offending subject institution, by any means leaving a written trace, of the penalties or pecuniary sanctions, the reasons justifying them, and, where applicable, the deadlines by which they must be paid.

Article 30.- The sums corresponding to the penalties and pecuniary sanctions are recovered, upon referral by the General Secretariat of the CNEF, by the National Directorate of the BEAC, by automatic debit from the subject institution's account in its books.

For subject institutions not having an account with the BEAC, the institution holding the account(s) of the defaulting institution, upon referral by the General Secretariat of the CNEF, debits the amount due from said account(s) and credits it to the account of the National Economic and Financial Committee.

Payment of sums corresponding to penalties and pecuniary sanctions may also be made by subject institutions by any other means prescribed by the Secretary General of the CNEF. In this case, a notification is sent by the concerned subject institution to the Secretary General of the CNEF, accompanied by any element that can justify the effective payment of the amount of the penalty or pecuniary sanction.

Article 31.- The sums recovered under sanctions are paid, in equal parts, to the BEAC and the National Economic and Financial Committee.

TITLE VI: SPECIFIC SANCTIONS RELATING TO USURY

Article 32.- Anyone acting either on their own behalf or on behalf of a third party, legal or natural person, who has granted a usurious credit, shall be punished by imprisonment of one to six months and a fine of one hundred thousand (100,000) to one hundred million (100,000,000) FCFA or only one of these two sanctions.

Article 33.- The fine provided for in Article 32 of this Regulation depends on the amount of credit granted as follows, in CFA francs:

• one hundred thousand (100,000) to one million (1,000,000), for credit amounts less than or equal to five million (5,000,000);
• one million and one (1,000,001) to two million (2,000,000), for amounts greater than five million (5,000,000) and less than or equal to ten million (10,000,000);
• two million and one (2,000,001) to five million (5,000,000), for amounts greater than ten million (10,000,000) and less than or equal to fifty million (50,000,000);
• five million and one (5,000,001) to ten million (10,000,000), for amounts greater than fifty million (50,000,000) and less than or equal to one hundred million (100,000,000);
• ten million and one (10,000,001) to twenty-five million (25,000,000), for amounts greater than one hundred million (100,000,000) and less than or equal to five hundred million (500,000,000);
• twenty-five million and one (25,000,001) to fifty million (50,000,000), for amounts greater than five hundred million (500,000,000) and less than or equal to one billion (1,000,000,000);
• fifty million and one (50,000,001) to one hundred million (100,000,000), for amounts greater than one billion (1,000,000,000).

In case of recidivism, the penalties incurred are doubled.

Article 34.- For legal persons not falling under the jurisdiction of COBAC, the Court may order the provisional closure of the enterprise when the usurious operation is carried out by it or its managers and employees. The Court's decision is accompanied by the appointment of a provisional administrator or a trustee.

The provision provided for in the first paragraph of this article applies regardless of the legal personality or lack thereof of the legal person concerned.

The court may also order that the judgment be published in full or in extracts in the newspapers it designates and that it be displayed in the places it determines, at the expense of the offender, provided that these costs do not exceed the minimum amount of the fine incurred.

Article 35.- The provisions of Articles 32 and 33 of this Regulation apply without prejudice to COBAC's sanctions for subject institutions falling under its jurisdiction.

Article 36.- The statute of limitations for the offense of usury runs from the day of the last collection, either of interest or principal, or of the last delivery of the asset related to the usurious operation.

TITLE VII: MISCELLANEOUS AND FINAL PROVISIONS

Article 37.- The CNEF ensures the reliability of the data transmitted by subject institutions on the TEG and banking conditions, as well as their compliance with the provisions of this Regulation.

To this end, the CNEF is authorized to request from subject institutions any information or the communication of any supporting document useful for the exercise of its missions within the framework of this Regulation.

Article 38.- Disputes relating to the TEG are brought by the borrower before the competent court, which requests the opinion of the CNEF prior to pronouncing its decision.

Article 39.- The Secretary General of the CNEF, the National Director of the BEAC, the Secretary General of COBAC, the Governor of the BEAC and any other competent authority are responsible, each in their area of competence, for the implementation of this Regulation.

Article 40.- This Regulation repeals Regulation No. 01/CEMAC/UMAC/CM of October 02, 2012, containing various provisions relating to the TEG and the publication of banking conditions, and Regulation No. 02/CEMAC/UMAC/CM of October 02, 2012, defining and repressing usury in CEMAC, as well as any other previous text on the same subject.

Article 41.- This Regulation is drafted in a single original in French, English, Spanish and Arabic, the French text being authoritative in case of divergence. It enters into force from its date of signature and is published in the Official Bulletin of CEMAC.

Signed, on 10/08/2020

The President of the Ministerial Committee,

César-Auguste MBA ABOGO