Instruction No. 004-DCR/09 of October 1, 2009 on the Reporting of Banking Risks

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INSTRUCTION NO. 004-DCR/09 of October 1, 2009 on the Reporting of Banking Risks

The Governor of the Central Bank of Madagascar, Having regard to the amended Law No. 94-004 of June 10, 1994 establishing the statutes of the Central Bank of Madagascar, Having regard to the amended Law No. 95-030 of February 22, 1996 on the activity and supervision of credit institutions, Having regard to Decree No. 2007-027 of January 29, 2007 appointing the Governor of the Central Bank of Madagascar, DECIDES:

Article 1: General Provisions
This instruction applies to credit institutions, hereinafter referred to as reporting entities, unless otherwise provided for the category stipulated by the aforementioned amended Law No. 95-030. It defines the procedures for transmitting information on the credits of their respective clients, as well as their processing and utilization by the Central Bank's Risk Center, hereinafter referred to as the Risk Center.

Article 2: Definitions
For the purposes of this instruction, the following terms are defined as:

• Reporting Entity(ies), credit institutions authorized as territorial or extra-territorial banks, financial establishments, and specialized financial institutions;
• Central Bank's Risk Center, the suite of computerized applications made available to the Central Bank for managing information on credits transmitted by reporting entities;
• Credit Outstanding, the amount effectively made available to the borrower, net of corresponding repayments and excluding accrued interest. It notably includes disbursed credits, including credits granted from public or private dedicated funds, and signature credits.
  The definitions of certain terms used in this instruction are provided in the annex, which forms an integral part thereof.

Article 3: Nature of Information to be Reported
3.1 Reporting entities are required to report credit outstanding by form as follows:

• Form 01: Mobilization of local commercial paper,
• Form 02: Mobilization of foreign-origin claims,
• Form 03: Mobilization of administrative claims,
• Form 04: Advance on merchandise inventory,
• Form 05: Advance on product inventory subdivided into:
  • F05 a: Advance on product inventory,
  • F05 b: Common granaries (CG) and equivalents (Advance on inventory in CG and equivalents).
• Form 06: Overdrafts subdivided into:
  • F06 a: Administrative market pre-financing,
  • F06 b: Cash facility,
  • F06 c: Exceptional debit balance on current account,
  • F06 d: Debit balance following Documentary Credit Facility (DCF) utilization,
  • F06 e: Advance on cash voucher,
  • F06 f: Advance on time deposit,
  • F06 g: Advance on other securities.
• Form 07: Mobilization of credit sales,
• Form 08: Forbearance,
• Form 09: Pre-financing of product collection subdivided into:
  • F09 a: Pre-financing of agricultural product collection,
  • F09 b: Pre-financing of non-agricultural product collection,
• Form 10: Other working capital credits subdivided into:
  • F10 a: Working capital credit for operations,
  • F10 b: Social credit,
  • F10 c: Consumer credit,
  • F10 d: Microinsurance credit,
  • F10 e: Education credit,
  • F10 f: Mixed credit,
  • F10 g: Others.
• Form 11: Equipment credit,
• Form 12: Real estate credit subdivided into:
  • F12 a: Operational real estate credit,
  • F12 b: Residential real estate credit.
• Form 13: Finance lease and hire-purchase subdivided into:
  • F13 a: Furniture,
  • F13 b: Real estate,
  • F13 c: Business premises and artisanal establishments,
  • F13 d: Hire-purchase.
• Form 14: Subordinated loan,
• Form 15: Signature credit subdivided into:
  • F15 a: Signature credit for DCF,
  • F15 b: Signature credit for letters of credit,
  • F15 c: Signature credit for aval and guarantees,
  • F15 d: Other signature credits.
    3.2 Clients with zero credit outstanding continue to appear in the risk declaration but without an commitment amount. Within five years from the clearance of commitments and in the absence of new commitments, reporting entities shall remove them from the risk declaration, subject to communicating to the Risk Center the information listed in paragraph 3.4 below, namely:
• Full identity and identification document number for natural persons,
• Company name and statistical number for legal persons.
  This provision applies as soon as business relations between reporting entities and their clients cease; the subsequent declaration obligation is then automatically lifted for reporting entities.
  3.3 Monthly declarations submitted by reporting entities to the Risk Center must be accompanied by a list of clients removed from the risk declaration according to the identification elements cited above.
  3.4 Reporting entities are required to communicate borrower identification to the Risk Center as follows:
• Natural person: full name and forenames according to the order on the identification document, followed by the National Identity Card (CIN) number for nationals, or passport, residence card, or foreign identity card for foreigners;
• Legal person: the statistical number must be the base identification reference. In the absence of a statistical number, pending normalization of their clients' status and before the expiration of the transitional period, reporting entities shall communicate provisionally, in order:

1. either the existing Central Bank code for persons already registered at the Risk Center prior to this instruction's publication,
2. or the receipt number for the declaration of establishment.
   3.5 For legal persons lacking any of the identifiers listed in points 1 and 2 of paragraph 3.4 above, reporting entities must communicate during each declaration:

• the list of these clients with their respective outstanding amounts; reporting entities must regularize the status of these borrowers before the transitional period expires;
• the global amount of commitments concerned on a specific line.
  The name of each legal person must include the full company name followed by its usual acronym, if applicable. In case of risk of confusion in denominations, the Risk Center automatically assigns a particular identification index to concerned persons, intended solely to distinguish homonyms in relations between the Risk Center and all reporting entities.
  3.6 Alongside quantitative information, reporting entities must also communicate information on borrowers and their respective credits according to the corresponding exchange files attached in the annex.
  3.7 For borrowers subject to regular accounting, reporting entities must communicate to the Risk Center financial statements for the last three fiscal years, including the final year of repayment of the last credit. These financial statements must notably include: the balance sheet, income statement, cash flow table, and annexes according to models attached in the annex. The communication deadline is set at one (1) month from the approval of annual accounts by the ordinary general meeting of partners or the sole partner.
  3.8 Credits managed on behalf of Participation Companies are subject to separate registration from that of participants; corresponding declarations must specify the theoretical allocation of risks among interested parties within the reserved Comment field.
  3.9 The use of 'not elsewhere classified' (n.c.a.) or other categories must constitute an exception.
  Reporting entities must include the precise title of information classified under this category in the reserved Comment field.
  3.10 Reporting entities must ensure that business links declared by their borrowers can be verified in cases where the relevant links also maintain relations with them.

Article 4: Reporting and Consultation Procedures
4.1 Information transmission is carried out via secure electronic means. The use of paper format is subject to prior authorization by the Central Bank.
4.2 For any declaration or consultation, access to the Risk Center by a user must undergo rigorous security measures. Application procedures for security devices concern:

• for the reporting entity:

1. user definition with authorized access rights: declaration, consultation, or others defined by the Risk Center.
2. official request for registration, user replacement, or modification of access rights, to be submitted to the Central Bank,
3. password customization and management by the user.

• for the Central Bank: fulfillment of the reporting entity's request at the Risk Center, materialized by providing the user with an access code composed of a username and initial password.
  4.3 The access code is personal. Each reporting entity must take all necessary measures for its preservation and security; it is responsible for any abusive or unauthorized use of this code.
  4.4 Any credit with an individualized counterparty must be declared regardless of the position of other accounts opened in the name of the borrower registered at the Risk Center. No compensation between a credit account and a debit account is authorized, except for ordinary current debit and credit accounts opened in the name of the same holder under a balance agreement convention.
  4.5 The reporting entity must promptly communicate to the Risk Center, independently of paragraph 3.5 above, any significant event occurring in the borrower's life during the credit repayment period, such as: change of management, modification of address or location, modification of share distribution, debt clearance, or other facts likely to influence production, debt-bearing capacity, and solvency.

Article 5: Frequency and Cut-off Date
Reporting entities submit their risk declaration monthly. The reported information is cut off on the last business day of each month and must reach the Risk Center no later than fifteen (15) days after the cut-off date.

Article 6: Various Obligations and Rights
6.1 The reporting entity must obtain the borrower's prior written consent that information concerning them will be communicated to the Risk Center for consultation by other credit institutions.
The reporting entity must inform the borrower of their rights and responsibilities listed below:

• at any time, the borrower, through the reporting entity, has the right to consult said information and, where applicable, request rectification of their information through them in accordance with the procedure provided for this purpose;
• the borrower remains responsible for the accuracy of information they have communicated; they are subject to penal and civil proceedings in case of false information;
• information concerning the borrower, expressly mentioned or not in this instruction, is protected by confidentiality and professional secrecy rules.
  6.2 The reporting entity is responsible to the Central Bank, borrowers, and third parties for the accuracy, completeness, and consistency of transmitted information.
  The same applies to the protection, conservation, and transmission of data received from the Risk Center within the framework of applicable legislation.
  6.3 Consultation must be conducted in accordance with access conditions specified in paragraph 4.2 of this instruction.
  6.4 The reporting entity submits to the Central Bank any rectification request accompanied by justification. To this end, the Central Bank may request supplementary information.
  6.5 All persons authorized to access Risk Center data or assigned to their processing and utilization are bound by professional secrecy under penalties provided by applicable penal legislation.

Article 7: Penalties
All non-compliance with the provisions of this instruction, particularly delays in transmitting information, as well as communications of inaccurate documents or information, are subject to the sanctions or penalties stipulated in Articles 49, 52, and 83 of the amended Law No. 95-030 of February 22, 1996 on the activity and supervision of credit institutions.

Article 8: Transitional and Final Provisions
This instruction enters into force upon notification to Professional Associations and other reporting entities not members of a Professional Association. Reporting entities have a six-month deadline from this date to update their respective databases in accordance with the provisions of this instruction. All prior instructions on banking risks are hereby repealed and remain repealed. Done in Antananarivo, on October 1, 2009 The Governor, Frédéric RASAMOELY.

ANNEXES:

1. Glossary
2. Beneficiary code
3. Credit nomenclature
4. Risk exchange file
5. Third-party declaration (legal person)
6. Third-party declaration (natural person)
7. Guarantee file
8. Table list: guarantee type – conventional rate – repayment frequency – amortization code – property form – tax regime.
9. ISO country code
10. ISO currency code
11. Legal classification
12. Commune codes
13. Code and Nomenclature of Products and Activities in Madagascar (NOPAMA).
14. Financial statements: Balance sheet, income statement, cash flow table, annexes to financial statements
15. Profession code.