INSTRUCTION NO. 40 ON THE PUBLICATION OF BANKING CONDITIONS

The Central Bank of Congo,

Having regard to Law No. 005/2002 of May 7, 2002, relating to the constitution, organization, and functioning of the Central Bank of Congo, particularly Article 6;

Having regard to Law No. 003/2002 of February 2, 2002, relating to the activity and supervision of Credit Institutions, particularly Title 1;

Having regard to Law No. 002/2002 of February 2, 2002, laying down provisions applicable to Savings and Credit Cooperatives, particularly Article 6;

Having regard to Law No. 11/020 of September 15, 2011, setting rules relating to the microfinance activity in the Democratic Republic of Congo, in Articles 57 to 61;

Considering the need to promote transparency in the pricing of financial institutions in order to foster healthy competition in the sector and protect the client;

Considering the urgency of creating the conditions for optimal development of the credit market through better transparency of costs;

Hereby adopts the following regulatory provisions relating to the publication of banking conditions regarding the granting of credit.

Chapter 1: Scope of Application

Article 1:

This Instruction applies to Credit Institutions and Microfinance Institutions, hereinafter referred to as "subject institutions".

Chapter 2: Definitions and Publication of Banking Conditions

Article 2:

By banking conditions, is meant:

• the rates applicable to operations with customers;
• mandatory levies for the benefit of the State or public institutions;
• commissions collected by the subject institution;
• fees and commissions collected on insurance services;
• fees related to other services.

Article 3:

Subject institutions are required to publish quarterly, and immediately following any change, by permanent display in their branches, counters, and website, their banking conditions applicable to customers.

These information must also be transmitted to the Central Bank of Congo / Direction of the Supervision of Financial Intermediaries.

Article 4:

Public information must be provided at least by paper medium and by display within the premises of the subject institutions.

Information materials must be drafted in a clear, concise manner and in simple language in French and in national languages, precisely indicating the labels of the services offered, the corresponding pricing, and the value dates.

Furthermore, subject institutions must ensure that the communication of information to illiterate clients is done orally and with specific materials.

Article 5:

Subject institutions must ensure that the font used is legible and that its size is not less than 12, and avoid the abusive use of footnotes or any other presentation element that could confuse the client or mislead them.

Article 6:

Subject institutions must ensure that the information provided to customers is accurate, relevant, and up-to-date.

Article 7:

Subject institutions are authorized to apply one or the other of the fees and commissions defined below.

Article 8:

The various bank fees and commissions that subject institutions are required to apply are as follows:

• Bank Fees
  • File fees
  • Insurance fees
  • Mortgage fees
  • Setup fees
  • Pledge registration fees
  • Credit supervision/follow-up/management fees
• Bank Commissions
  • Withdrawal commission
  • Quarterly commission
• Mandatory Savings

Article 9:

The various fees set by subject institutions are defined as follows:

• File fees are fees generated by the study of the credit file from the request to the setup of the credit. They are composed of the following fees:
  • file opening fees;
  • credit application study fees;
  • credit setup fees;
  • credit notification fees.
• Insurance fees are an insurance that guarantees subject institutions against payment defaults by borrowers occurring for reasons that are either specific to these debtors (insolvency) or related to external constraints (notably political risks, death, disability, and other natural risks).
• Mortgage fees are fees borne by a borrower when purchasing real estate using a bank loan or due to taking collateral by any other creditor. They include taxes and duties and the remuneration of notaries.
• Setup fees are fees charged by the subject institution to make the loaned funds available to the borrower. They are generally calculated as a percentage of the withdrawn capital amount.
• Pledge registration fees are fees borne by the borrower for the registration of movable property made available to a creditor, allowing them to protect against the risk of non-payment.
• Credit supervision/follow-up/management fees are fees charged relating to the logistics used to ensure, in particular, the proper allocation of the granted credit, the evaluation of the financed activity and/or the repayment capacity, necessary for the proper resolution of the loan.

Subject institutions are required, under penalty of sanctions, to register mortgages and pay the insurance policy when they collect the related fees from customers.

Article 10:

The commissions collected by the subject institution are defined as follows:

• The quarterly commission is a commission collected quarterly on an active overdraft line. The first collection is made at the setup and then every three months until the extinction of the line.
• Mandatory savings is a portion of the loan that partially guarantees the credit granted, generally to an individual or a group of individuals. It is calculated based on the percentage of the amount granted and repayable at the final maturity in case of proper resolution of the credit.

The constitution of mandatory savings can in no case be deducted from the amount of the credit granted.

Article 11:

Fees and commissions must be expressed as a percentage of the amount of the loan granted or in value for the determination of the Effective Annual Rate (EAR).

Subject institutions are required, upon customer request, to convert fees and commissions into value as a percentage of the amount of the loan granted to facilitate comparison.

Article 12:

Any other fee and/or commission not included in this Instruction must be subject to prior authorization from the Central Bank of Congo, following justification by the requesting subject institution.

Furthermore, modifications applied to banking operations must be brought to the knowledge of the Central Bank of Congo before their effective application.

Article 13:

Any subject institution is required to issue a statement or any other document to any client who has benefited from a financial product or service from it.

Article 14:

Subject institutions give, with the obligation to answer all clarification questions, credit applicants at least four (4) calendar days to read the contract of a financial product or service, except for the renewal of credit granted to the same client under similar conditions.

This contract must essentially include:

• all fees and charges that may be imposed as well as the Effective Annual Rate (EAR);
• the total aggregated cost of the financial product or service as well as the repayment schedule;
• the main characteristics of the financial product or service;
• significant risks;
• a summary of the institution's privacy policy;
• any cost associated with early payment or fees associated with late payment;
• the contact details of the resource persons of the institution's Complaints Processing Unit.

Furthermore, the Central Bank of Congo is required to inform all subject institutions about the introduction of any other fee or commission.

Article 15:

When the loan contract stipulates that subject institutions reserve the right to accept or not the credit request of the borrower, the contract accepted by the latter becomes perfect only on condition that the lender has informed the borrower, within a period of seven (7) calendar days, of its decision to grant the credit.

After the expiration of the aforementioned period, the decision to grant the credit brought to the knowledge of the borrower is valid only if the latter expresses their desire to benefit from it before the subject institution fulfills its obligation to set up the credit.

Article 16:

Any modification of loan conditions, whether downward or upward, notably the periodic amount to be repaid, the interest rate, or the duration, gives rise to a written notification to the borrower regarding the new offer, thirty (30) calendar days before the application of the new conditions.

Subject institutions are nevertheless required to explain to the client the foundations and justifications of this modification as well as the scope of the net margin set by them.

However, this obligation applies only to loans with variable interest rates.

Article 17:

In the event of refusal of the new conditions, the borrower is required to repay the remaining balance, under the conditions of the current contract.

Article 18:

Any contract for products or services offered or presented in violation of Article 15 of this Instruction shall be invalid and inapplicable against the client.

Article 19:

When there is a condition relating to forced or mandatory savings, subject institutions must inform the client of the terms of access to the aforementioned account.

Article 20:

Without prejudice to the provisions relating to the Audiovisual Communication Law, any advertisement containing, in any form whatsoever, false allegations, indications, or presentations likely to mislead the client is prohibited.

Chapter 3: Sanctions

Article 21:

Any person violating the provisions of this Instruction is subject to the sanctions provided for by legal and regulatory texts.

Chapter 4: Transitional and Final Provisions

Article 22:

All contrary provisions in this matter are repealed, as of the entry into force of this Instruction.

Article 23:

This Instruction enters into force after a transitional period of six months running from the date of its signature.

Done in Kinshasa, on JAN 03, 2019

Déogratias MUTOMBO MWANA NYEMBO Governor