Instruction No. 002-DCR/09 of July 23, 2009 on Risk Reporting by Microfinance Institutions

INSTRUCTION NO. 002-DCR/09 OF JULY 23, 2009
ON RISK REPORTING BY MICROFINANCE INSTITUTIONS

The Governor of the Central Bank of Madagascar, Having regard to amended Act No. 94-004 of June 10, 1994 on the statutes of the Central Bank of Madagascar, Having regard to amended Act No. 95-030 of February 22, 1996 on the activity and supervision of credit institutions, Having regard to Act No. 2005-016 of September 29, 2005 on the activity and supervision of microfinance institutions, Having regard to Decree No. 2007-027 of January 29, 2007 on the appointment of the Governor of the Central Bank of Madagascar, HAS DECIDED:

Article 1: General Provisions
The Microfinance Risk Center (CRM) is hosted at the Central Bank of Madagascar, and its management is entrusted to the General Secretariat of the Banking and Financial Supervision Commission (SG-CSBF). This instruction specifies the information to be communicated by microfinance institutions (MFIs) to the CRM, the transmission methods, reporting periodicity, the rights and obligations of institutions and borrowers, as well as sanctions.

Article 2: Nature of Information to be Reported
MFIs are required to report to the SG-CSBF all loans granted to their clients or members, regardless of the outstanding amount, as well as information regarding these beneficiaries in the formats provided in the annex to this instruction.
2.1 Loans to be reported include, among others, disbursed loans (including those granted from designated public or private funds) and signed commitments. The 'outstanding amount' of a loan is defined as the amount effectively made available to the beneficiary, minus related repayments and excluding accrued interest.
Loans with zero outstanding amounts must be reported for a period of five years.
2.2 Each beneficiary is coded as follows:

• By their national identity card number for natural persons;
• By their statistical number for legal entities;
• By their passport number for foreigners.
  For natural persons, the full surname and given names following the order on the identity document are mandatory. For legal entities, the name includes the full corporate name followed, where applicable, by the usual acronym.

Article 3: Reporting Procedures
3.1 Information intended to feed the CRM must be transmitted via secure electronic means to the CRM's address or, where applicable, to the SG-CSBF on electronic media.
Without prejudice to the formal obligations set forth in Article 2 of this instruction, paper format reporting may be used exceptionally upon express authorization by the SG-CSBF.
MFIs will take all necessary measures within their internal control systems to ensure reliable and regular reporting.
3.2 For mutualist MFIs, the individualized information specified in Article 2 must be reported either by the central body or by affiliated MFIs with legal personality. In the latter case, express authorization from the central body approved by the SG-CSBF is required. To this end, a request accompanied by information justifying the existence of an adequate operational and control structure enabling transmission in the prescribed forms and timeframes will be submitted to the SG-CSBF by the central body.
In all cases, the central body remains responsible to the SG-CSBF for the accuracy and completeness of transmitted information.
For non-mutualist MFIs, the declarations specified in Article 2 must be made by the registered office.
3.3 Prior to the first transmission, each MFI communicates to the SG-CSBF the name of the authorized correspondent entitled to access the CRM for transmitting information. MFIs are required to notify the SG-CSBF as soon as possible in case of a change to this correspondent.
Since access to the CRM is secured, a provisional access code consisting of a username (login) and password is assigned by the SG-CSBF to each MFI, which must be modified during its first access to the CRM. Access codes to the CRM are strictly personal; MFIs must take all necessary measures for their preservation and security. They are responsible for any abusive or unauthorized use of these elements. Each mutualist MFI must, prior to its first declaration, communicate to the SG-CSBF the list of affiliated MFIs and attached counters for their coding in the CRM.

Article 4: Periodicity and Cut-off Date
The information subject to reporting is finalized on the last business day of each month. These must reach the CRM, regardless of the transmission method chosen under point 3.1 of Article 3 of this instruction, no later than fifteen (15) days after the cut-off date.

Article 5: Obligations of MFIs
5.1 The MFI must obtain the prior written consent of the loan applicant that information concerning them will be communicated to the CRM for consultation by other credit institutions.
5.2 The MFI must inform the loan applicant that:

• at any time, they have the right to consult, and where applicable, to request through the MFI the correction of information concerning them in accordance with the procedure provided for this purpose,
• they remain responsible for the accuracy of the information they have provided; the provision of false information may lead to civil and criminal proceedings,
• CRM information is protected by confidentiality rules and professional secrecy.
  5.3 The correction of data transmitted by an MFI is subject to authorization by the SG-CSBF.
  To this end, the MFI must provide the reasons and/or justifications for such correction.
  5.4 Each MFI, as well as all persons authorized to access CRM data and those involved in their processing, are bound by professional secrecy under penalty of sanctions provided by current legislation.

Article 6: Sanctions
Non-compliance with the provisions of this instruction results in the application of sanctions or penalties stipulated in Articles 49, 52, and 82 of Act No. 95-030 of February 22, 1996 on the activity and supervision of credit institutions.

Article 7: Transitional and Final Provisions
7.1 For loans outstanding on the date of entry into force of this instruction, MFIs are required to obtain from beneficiaries the consent specified in point 5.1 within six months of that date.
7.2 Beneficiaries with outstanding loans on the entry into force date but whose identifiers (National ID or Statistical Code) are unavailable are individually listed in the CRM with provisional codes.
For legal entities, MFIs shall sequentially use either the receipt number for the filing of the creation declaration or the provisional code assigned by the MFI as an identifier pending the availability of the statistical number. For natural persons, the provisional code is assigned by the MFI. MFIs have a six-month period to complete missing information and communicate it to the CRM.
7.3 The initial declarations prescribed in Article 2 will be made based on the situation finalized as of July 31, 2009.
7.4 This instruction enters into force upon its notification to the professional association.
Antananarivo, July 23, 2009
The Governor,
Frédéric RASAMOELY.