Instruction No. 044/06-GV/OF of December 13, 2006 on the Reorganization of Clearing House Operations

INSTRUCTION NO. 044/06-GV/OF OF DECEMBER 13, 2006 ON THE REORGANIZATION OF CLEARING HOUSE OPERATIONS THE GOVERNOR OF THE CENTRAL BANK OF MADAGASCAR, Having regard to Law No. 94-004 of June 10, 1994, as amended, establishing the Statutes of the Central Bank of Madagascar, particularly Article 42 thereof, HEREBY DECIDES:

CHAPTER I - GENERAL PROVISIONS
Article 1: OBJECT
This instruction aims to specify the operation of clearing houses located in the following localities: ANTANANARIVO, AMBATONDRAZAKA, ANTA LAHA, ANTSIRANANA, FIANARANTSOA, MAHAJANGA, MANAKARA, MORONDAVA, NOSY-BE, SAMBAVA, TAOLAGNARO, TOAMASINA, TOLIARY. Other clearing houses may be established in other localities.

Article 2: MEMBERSHIP
2.1 - All primary banks or financial institutions that maintain account relationships with the Central Bank may be admitted as participating members of a clearing house by letter addressed to the Governor of the Central Bank, indicating the localities where they wish to be represented. The application must include a commitment to comply with the rules and procedures established by this Instruction.
2.2 - The Central Bank may represent the Public Treasury on all clearing locations listed in Article 1, provided that the latter officially requests it.
2.3 - Each member may freely terminate its membership, subject to prior notification to the Central Bank via official correspondence with acknowledgment of receipt at least one month in advance.

Article 3: PRESIDENCY
3.1 - Each clearing house operates under the direction of a President appointed by the Governor of the Central Bank, responsible for ensuring the proper functioning of clearing sessions and supervising operations conducted by members.
3.2 - In this capacity, the President may issue a reprimand to a member's representative, impose temporary suspension, or request replacement by the appointing member.
3.3 - If a session is interrupted or cannot be held for any reason, the President, after consulting other representatives, decides on necessary measures.

Article 4: APPOINTMENT OF REPRESENTATIVES
4.1 - Each member must notify the President of the names of two principal representatives and one alternate for clearing sessions.
4.2 - However, the President determines, in consultation with each member's local manager, whether the presence of both representatives or just one is required based on the volume and value of transactions recorded in a session.
4.3 - The Central Bank also appoints two representatives distinct from the President to monitor clearing operations conducted in its name and, pursuant to Article 2.2 of this Instruction, on behalf of the Public Treasury.

Article 5: Clearing sessions are held at the Central Bank premises according to the following frequencies and schedules:

• in ANTANANARIVO: on all working days at 10:00 and 14:00, and in case of a half-holiday, at 9:00 in the morning.
• in other localities: once on all working days at 10:00, and in case of a half-holiday, at 9:00 in the morning.
  A sign-in sheet is countersigned by member representatives. A minutes document indicating the number, movements, and balance of operations processed for each member is also prepared and signed by their representatives and the President.

CHAPTER II - CONDUCT OF CLEARING SESSIONS
Article 6: Each clearing session involves the following procedures:

• presentation and settlement of bills/promissory notes;
• immediate presentation and settlement of checks;
• return and reimbursement of unpaid bills/promissory notes and checks.

Article 7: PRESENTATION AND SETTLEMENT PROCEDURES.
7.1 - A member's representative holds all negotiable instruments drawn on the accounts of other members or domiciled at their counters, previously stamped on the reverse with the "cleared on.." mark. The date of the stamp corresponds to the settlement day of the instrument.
7.2 - These instruments are grouped by distinct presentation slips sorted by recipient and according to categories of check or instrument presentation.
7.3 - The amounts on all slips to be settled on the session day by a single institution are transferred to a summary slip so that ultimately only one total needs to be processed per paying institution. The overall total of each summary slip is then recorded in an "individual statement" under the column titled "various instruments presented and rejected" opposite the name of the concerned institution.
7.4 - Each member's representative verifies the summary slips submitted for settlement, records the total amount of each in their "individual statement" under the column titled "various instruments received and processed," calculates the balance of this statement, and communicates it to the Central Bank's representative for overall approval.
7.5 - Erasures and interlineations, even if approved, are not permitted on any statements, tables, or documents related to the clearing house.
7.6 - Rejected instruments are returned to presenters accompanied by a slip and a form precisely indicating the actual reason for rejection (noted: insufficient funds, no agreement). The "cleared" stamp on the reverse of these instruments is overprinted with a cancellation mark.

Article 8: The presentation of instruments does not constitute payment and does not result in novation. The amounts representing the value of instruments become the property of beneficiaries only after entries are posted in the Central Bank Agency's Journal, subject to reimbursement in case of rejection.

CHAPTER III - INSTRUMENTS ADMITTED FOR CLEARING
Article 9: Checks held by one bank and payable by another are eligible for clearing on all clearing locations in Madagascar from the moment both the presenting bank and the drawn bank are duly represented at the same location.

Article 10: PRESENTATION PROCEDURES
10.1 - Checks and transfer orders are presented and settled during the same session.
10.2 - Sight instruments are settled at the session following their presentation. If the amount could not be applied to the debit of the drawees' accounts, reimbursements are processed at the session held on the day following settlement.
Maturity or sight instruments may exceptionally receive immediate settlement according to procedures established for checks, provided the presenting institution has previously obtained written agreement from the domiciliary regarding this presentation.
10.3 - Time instruments with fixed maturity dates are presented for clearing at maturity, i.e., the following working day.
10.4 - Time instruments presented at a later date will be treated as sight instruments.

Article 11: REJECTION PERIODS
11.1 - The rejection periods for checks and instruments are set at 2 working days following the clearing date for on-location instruments and 5 working days following the clearing date for off-location or transferred instruments.
11.2 - Checks and instruments not returned within the aforementioned periods will no longer be eligible for rejection by the Clearing House. Consequently, they may only undergo direct return from the drawn institution to the presenting institution if the latter agrees to such return.
11.3 - Checks and instruments returned either through the normal Clearing House channel or directly as explained above may subsequently be presented to the Clearing House following standard procedures.

Article 12: This instruction repeals and replaces all prior provisions regarding the operation of clearing houses. It will enter into force on January 18, 2007, following widespread distribution to banks and financial institutions.
ANTANANARIVO, December 13, 2006
The Governor
Gaston E. RAVELOJAONA