Instruction No. 01-CR/05 of March 15, 2005 on the Mandatory Reserves System

INSTRUCTION NO. 01-CR/05 OF MARCH 15, 2005
ON THE MANDATORY RESERVES SYSTEM

In order to improve the control of banking liquidity, the Central Bank has decided to exclude bank cash holdings from the components constituting mandatory reserves.

I- SCOPE OF APPLICATION
Banks covered by Articles 1 and 3 of Law No. 95-030 of February 22, 1996, concerning the activity and supervision of credit institutions, are required to maintain a minimum amount of reserves with the Central Bank under the conditions defined below.

II- DETERMINATION OF MANDATORY RESERVES
The minimum reserve amount is determined by reference to deposits in Ariary and foreign currencies, both for residents and non-residents, as they appear on the monthly statement. Base of Mandatory Reserves Coefficient 1- Demand deposits and similar § Ordinary accounts § Guarantee deposits § Payable charges § Other sums due to customers § Matured treasury bills § Payable charges on treasury bills 2- Time and savings deposits § Time deposits § Special-regime savings accounts § Outstanding treasury bills 15 %

Affected institutions must submit to the Central Bank's Credit Department, before the 15th of each month, a declaration in accordance with the attached model showing the calculation elements of their reserves. In the absence of such a declaration by that date, the calculation will be based on the elements from the previous declaration increased by 15%.

III- PERIOD AND MODE OF CONSTITUTION
Mandatory reserves are calculated based on the elements of month n and must be constituted for 1 month starting from the 15th of month n + 1 as follows:

• The entirety of reserves based on both Ariary deposits and foreign currency deposits shall be constituted by the average amount of daily balances as of the transaction date.

IV- SURPLUSES OR DEFICITS IN THE CONSTITUTION OF MANDATORY RESERVES Reserve surpluses identified at the end of a period are not carry-forwardable. Institutions that have not constituted the required minimum amount of reserves on time are liable for default interest calculated based on the identified deficit and the number of days in the period; these amounts are automatically debited to the institution's account, as of the notification date. Their rate equals the 2-to-10-day repurchase rate increased by 5 percentage points. This instruction replaces all previous instructions, which are hereby repealed. It applies to reserves to be constituted starting from March 15, 2005. (Period from March 15 to April 14, 2005). THE GOVERNOR, Gaston RAVELOJAONA.

MANDATORY RESERVES DECLARATION:
SITUATION AS OF:
BASE OF MANDATORY RESERVES
RESIDENTS NON-RESIDENTS EXTRACT MONTHLY STATEMENT Ariary Currencies Ariary Currencies § Ordinary accounts 210 § Guarantee deposits 213 § Payable charges 2186 § Other sums due to customers 219 § Matured treasury bills 220 § Payable charges on treasury bills 2286 Subtotal (1) § Time deposits 211 § Special-regime savings accounts 212 § Outstanding treasury bills 220 Subtotal (2) TOTAL = (1) + (2) Mandatory reserves to be constituted TOTAL x 15 %