CENTRAL BANK OF MADAGASCAR

MONETARY POLICY IMPLEMENTATION DIRECTORATE

INSTRUCTION No. 002-DPM/26
on the general framework and operational procedures of the tiered mandatory reserve system

The Governor of Banky Foiben'i Madagasikara,

Given Law No. 2016-004 of July 29, 2016, supplemented by Law No. 2016-057 of February 2, 2017, on the Statutes of the Central Bank of Madagascar,

Given Law No. 2020 - 011 of September 1, 2020 on the Banking Law,

Given Decree No. 2023-011 of January 10, 2023 repealing the provisions of Decree No. 2019-2069 of November 6, 2019 and appointing the Governor of Banky Foiben'i Madagasikara,

Given Instruction No. 009-DOM/20 of November 25, 2020 modifying certain provisions of Instruction No. 009-DOM/19 relating to the mandatory reserve system.

DECIDES

TITLE I: General Framework of the Tiered Mandatory Reserve System

Article 1: Purpose

This instruction sets out the general framework and operational procedures of the tiered mandatory reserve system.

Article 2: Definition

Mandatory reserves represent the minimum amount that subject credit institutions are required to hold, in the form of non-remunerated deposits with BFM, for a period determined by the latter. They constitute an instrument for the structural management of banking liquidity and aim to support the orientation of resources towards financing the economy.

Article 3: Subject Institutions

Credit institutions authorized to receive deposits from the public, authorized to participate in BFM's monetary policy operations, and which have Ariary accounts opened in BFM's books are required to constitute mandatory reserves in the form of available deposits in their current account with BFM.

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Article 4: Calculation Bases

The minimum amount of mandatory reserves is determined based on the asset and/or liability items of credit institutions, in Ariary and in foreign currencies, for both residents and non-residents, as they appear on the monthly statement.

The calculation bases for mandatory reserves are as follows:

4.1. Demand and similar deposits (in Ariary and foreign currencies)

• Ordinary accounts;
• Guarantee deposits;
• Accrued expenses;
• Other amounts due to customers;
• Matured treasury bills;
• Accrued expenses on treasury bills.

4.2. Time and savings deposits (in Ariary and foreign currencies)

• Time deposits;
• Special savings accounts;
• Outstanding treasury bills.

TITLE II: Operational Framework of the Tiered Mandatory Reserve System

Article 5: Evaluation of Credit Institutions

Prior to determining the amount of mandatory reserves to be constituted, subject credit institutions are subject to an evaluation based on indicators defined by BFM. This evaluation results in the attribution of an overall score used to determine the mandatory reserve ratio applicable to each credit institution.

Article 6: Indicators

Credit institutions subject to mandatory reserves are evaluated based on indicators related to banking liquidity, intermediation, and financing of the economy.

The data used for the evaluation of credit institutions are those declared to BFM in accordance with current regulations.

Article 7: Determination of Scores

The overall score for each credit institution is determined from the indicators mentioned in Article 6.

Article 8: Mandatory Reserve Ratio

The mandatory reserve ratio applicable to each credit institution varies between 8.00% and 17.00% in increments of 1.0 percentage point.

Article 9: Parameters and Technical Procedures

The evaluation parameters, weightings, score calculation methods, applicable indicator thresholds, and periodic review procedures are determined by BFM.

The technical procedures for implementing the system are recorded in a technical note and communicated to credit institutions. In case of modification of the content of this note, subject institutions are informed. This note is not regulatory in nature and cannot be invoked against BFM.

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Article 10: Review

The mandatory reserve ratios are subject to a quarterly review by BFM. They are individually notified to credit institutions by any means leaving a written trace as soon as they are available. They are applicable from the start date of the mandatory reserve constitution period following their transmission by BFM to the banks.

At the time of reviewing the mandatory reserve ratio level, in case of absence, delay, or inaccuracy of the data necessary for the evaluation, BFM applies the highest mandatory reserve ratio to the institution concerned.

Article 11: Declaration

Credit institutions subject to the constitution of mandatory reserves send a declaration conforming to the model in the annex to BFM by the deadline for declaration indicated in the mandatory reserve constitution calendar published annually by BFM.

Article 12: Constitution of Mandatory Reserves

The entirety of mandatory reserves is constituted by the average amount of the operating date balance of the credit institution's current account opened in BFM's books.

Excess mandatory reserves observed at the end of a constitution period are not carried over.

Article 13: Penalties

A credit institution that does not comply with the minimum reserve requirements is liable to a penalty calculated based on the amount of the observed shortfall, the number of days in the period in question, and the number of infractions committed. Where applicable, the sanctions provided for in the banking law are applicable in accordance with the steps outlined below:

• for a first shortfall, a pecuniary sanction at the marginal lending facility rate, increased by 5 percentage points, is imposed on the credit institution;
• in case of infractions over successive constitution periods, a progressive increase of 5 percentage points per period is applied, not exceeding three successive shortfalls or three shortfalls in a fiscal year;
• in case of non-compliance with this last measure, the penalty rate applied to the third shortfall is doubled until the situation is regularized. Furthermore, the credit institution's file is transferred to the Banking and Financial Supervision Commission (CSBF) which may impose one or more of the sanctions provided for by the banking law.

The calculated penalty interest is automatically debited from the credit institution's current account opened in BFM's books. The date of the entry is communicated to the credit institution concerned.

Delays in transmitting information, as well as communications of inaccurate documents or information, are subject to the sanctions or penalties provided for by the banking law.

Article 14: Transitional Period

A transitional period is established from the entry into force of this instruction until August 4, 2026, to allow for the gradual adaptation of credit institutions to the tiered mandatory reserve system. During this period, the mandatory reserve ratio of 15.00% remains applicable.

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Article 15: Annex

The annex forms an integral part of this instruction.

Article 16: Entry into Force

This instruction enters into force on July 8, 2026.

Article 17: Final Provisions

All previous provisions contrary to this instruction, particularly those contained in instructions No. 008-DOM/19 of October 25, 2019, No. 001-DOM/24 of January 29, 2024, and No. 005-DOM/24 of November 4, 2024, incompatible with the tiered mandatory reserve system established by this Instruction, are and remain repealed.

Antananarivo, June 30, 2026

[Signature/Stamp]
THE GOVERNOR
Aivo H. ANDRIANARIVELO

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ANNEX

MANDATORY RESERVES

DECLARANT:

SITUATION AS OF:

MANDATORY RESERVE BASE	RESIDENTS	NON-RESIDENTS	Monthly Statement Extract
	Ar	Foreign Currency	Ar	Foreign Currency
Ordinary accounts					210
Guarantee deposits					213
Accrued expenses					2186
Other amounts due to customers					219
Matured treasury bills					220
Accrued expenses on treasury bills					2286
Subtotal (1)
Time deposits					211
Special savings accounts					212
Outstanding treasury bills					220
Subtotal (2)

Total = (1) + (2)
Mandatory reserves to be constituted
TOTAL x Coefficient

At ____________________, on ____________________ (Signatures and stamp of the bank) ---