Notice No. 01/GBM/2012 of 26 April - Mandatory Reserves

Banco de Moçambique Governor

NOTICE No. 01/GBM/2012 Maputo, 26 April 2012

SUBJECT: MANDATORY RESERVES

Considering the evolution of economic and financial indicators relative to the targets programmed for the current year and taking as a basis the most recent behavior of inflation and medium-term projections, the Bank of Mozambique, under the provisions of Article 27 of Law No. 1/92, of 3 January – Organic Law of the Bank, determines:

1. The Regulation on the Calculation and Establishment of Mandatory Reserves is approved, which constitutes an integral part of this Notice.

2. This Notice takes effect from the reserve establishment period, which begins on 07 May 2012, revoking Notice No. 07/GBM/2011, of 29 December.

Any doubts arising in the interpretation and application of this Notice must be submitted to the Markets Department of the Bank of Mozambique.

[Signature] Ernesto Gouveia Gove Governor

---

Banco de Moçambique Governor

REGULATION ON THE CALCULATION AND ESTABLISHMENT OF MANDATORY RESERVES

CHAPTER I SCOPE, CALCULATION AND ESTABLISHMENT

Article 1 Scope of Application

1. This Regulation applies to all credit institutions covered by Law No. 15/99, of 1 November – Law of Credit Institutions and Financial Companies, with the amendments introduced by Law No. 9/2004, of 21 July, holding liabilities referred to in Article 2 of this Regulation and monetary assets, with the Bank of Mozambique.

2. Excluded from the provisions of the preceding paragraph are credit institutions that do not receive public deposits, in accordance with the provisions of Law No. 15/99, of 1 November, with the amendments introduced by Law No. 9/2004, of 21 July.

Article 2 Liabilities Subject to Levy

The following liabilities constitute the levy base for Mandatory Reserves, as detailed in the Mandatory Reserves Calculation Sheet, attached to this Regulation:

a) Resident Deposits; b) Non-Resident Deposits; and c) State Deposits.

Article 3 Levy Rate

The levy base referred to in Article 4 of this Regulation is subject to a minimum daily rate, fixed at 8.25%.

---

Banco de Moçambique Governor

Article 4 Calculation of the Levy Base

1. The levy base upon which the daily rate applies is calculated from the simple arithmetic mean of the balances of the liabilities referred to in Article 2 verified over the calculation period.

2. The calculation periods for the levy base are, each month, as follows:

a) 1st period - from the 1st to the 15th day; and b) 2nd period - from the 16th to the last day of each month.

Article 5 Establishment Period

1. The periods for the establishment of mandatory reserves under this regime are as follows:

a) 1st period – from the 7th to the 21st day; and b) 2nd period – from the 22nd to the 6th day of the following month.

2. The mandatory reserves of the 1st establishment period correspond to the 2nd calculation period and vice-versa.

Article 6 Form of Establishment

1. Mandatory reserves are always constituted in national currency, the Metical.

2. Mandatory reserves may be constituted in at least one of the following forms:

a) Cash; b) Checks drawn by the institutions themselves on other national credit institutions; c) Account-to-account transfer; d) Other financial assets capable of integrating the clearing system, excluding demand deposits in foreign currency of credit institutions, with the Bank of Mozambique; and

---

Banco de Moçambique Governor

e) Cash in the institution's vault, maintained at branches and/or counters in rural areas, under the terms defined by the Bank of Mozambique.

Article 7 Methodology for Establishment to Observe the Daily Rate

The daily balances of demand deposits in National Currency of credit institutions with the Bank of Mozambique cannot be lower, each day, than the amount of mandatory reserves resulting from multiplying the levy base calculated under the terms described in Article 4, by the rate fixed in Article 3 of this Regulation.

CHAPTER II PENALTIES

Article 8 Assessment of Penalties

1. Penalties under this Regulation apply to the deficit of mandatory reserves and to the delay in sending information requested by the Bank of Mozambique, and take the form of a monetary fine.

2. Penalties on the deficit of mandatory reserves assessed at the end of each day are determined based on the following formula:

Penalty = [(SD + CX – (r x BI)) x T] / 365 days

Where:

SD – is the daily accounting balance of demand deposits in national currency of credit institutions with the Bank of Mozambique, obtained from statements issued by the Maputo Branch of the Bank of Mozambique.

CX – is the value in cash maintained daily in the vaults of credit institutions, obtained from information sent by the institutions to the Markets Department of the Bank of Mozambique.

r – is the minimum daily levy rate of the mandatory reserve, under Article 3 of this Regulation.

---

Banco de Moçambique Governor

BI – is the levy base for mandatory reserves, under Article 2 of this Regulation.

T – is the penalty rate for the deficit of mandatory reserves, under paragraph 3 of this Article.

3. The penalty T, provided for in paragraph 2 of this Article, corresponds to the Interest Rate of the Permanent Lending Facility in force on the date of the infringement, plus four percentage points.

4. Without prejudice to other measures that may be adopted, the Bank of Mozambique charges a penalty of five hundred meticais, for each business day of delay in sending the information referred to in Article 12 of this Regulation.

5. The Bank of Mozambique debits the demand deposit account of the infringing credit institution for the value of the penalties assessed according to the preceding paragraphs.

Article 9 Aggravation of Penalty

The penalty rate provided for in paragraph 3 of the preceding Article is subject to an aggravation of ten percentage points, whenever, during an establishment period, an institution incurs deficits in mandatory reserves for two or more days, consecutive or not.

Article 10 Blocked Account Regime

1. If in four consecutive establishment periods of mandatory reserves, in two of them (consecutive or not), an institution incurs deficits in mandatory reserves for three or more days of the same establishment period, the Bank of Mozambique blocks the balance of the free movement account, allowing only credit movements, without prejudice to any additional measures provided for in the Interbank Clearing and Settlement Regulation, approved by Notice No. 9/GBM/2005, of 24 August.

2. The institution is notified about the account blocking, at least four days before its implementation.

---

Banco de Moçambique Governor

3. The institution whose account is blocked undertakes, upon receipt of the notification, to immediately instruct the opening of a new account for clearing and other types of operations, with the Maputo Branch of the Bank of Mozambique.

4. The institution whose account is blocked is also obliged to fund the blocked account for the purpose of complying with mandatory reserves.

5. The Bank of Mozambique reserves the right to transfer from the new account to the blocked account the balances necessary for the institution to comply with Mandatory Reserves.

6. As long as deficits persist in the blocked account, the penalty on daily deficits is applied based on the rate provided for in Article 9 of this Regulation.

7. Within a period never less than four establishment periods of mandatory reserves, the Bank of Mozambique may instruct the lifting of the account blocking.

CHAPTER III FINAL PROVISIONS

Article 11 Exemption Period

1. All credit institutions are exempt from the establishment of mandatory reserves for a maximum period of three months, starting from the date of commencement of their activity.

2. If the institution wishes to join the Interbank Markets before the end of the period referred to in the preceding paragraph, it must waive the enjoyment of the remaining exemption period, in order to comply with the provisions of letter a) of Article 3 of Notice No. 02/GBM/09, of 26 February – Market Operations System.

3. The exemption referred to in paragraph 1 of this Article is automatic and its terms are formally communicated by the Banking Supervision Department of the Bank of Mozambique.

---

Banco de Moçambique Governor

Article 12 Submission of Information

1. Credit institutions covered by this Regulation must send to the Bank of Mozambique, with reference to the calculation period of the levy base indicated in paragraph 2 of Article 4, the information contained in the Mandatory Reserves Calculation Sheet attached, which forms an integral part of this Regulation.

2. The Mandatory Reserves Calculation Sheet referred to in the preceding paragraph must be received by the Bank of Mozambique by the third business day following the end of the calculation period to which it refers, and may be corrected until the last business day prior to the start of its respective establishment period. Late submission of sheets is an indispensable condition for acceptance regarding subsequent periods.

3. Any correction occurring during the establishment period to which the information refers and which implies a reduction of the levy base is not considered for the purpose of calculating the penalty, the previous information prevailing for these cases.

4. Credit institutions are obliged to keep, for a period of five years, all documents that allow them to prove the information contained in the Sheet referred to in paragraph 1 of this Article.

---

ANNEX: MANDATORY RESERVES CALCULATION SHEET

DESIGNATION	Day X	Day X+1	Day X+2	...	Day X+n	SIMPLE AVERAGE	RO's (M * RO Rate)
A. RESIDENT DEPOSITS
Demand Deposits	(4000010+4000020+4000030+4000040+4000050+4000060+4000070+4000080+4000090+4000100+4000110+4000120+4000130+4000140+4000150+4000160)
Deposits with Notice	(4000011+4000021+4000031+4000041+4000051+4000061+4000071+4000081+4000091+4000101+4000111+4000121+4000131+4000141+4000151+4000161)
Time Deposits	(4000012+4000022+4000032+4000042+4000052+4000062+4000072+4000082+4000092+4000102+4000112+4000122+4000132+4000142+4000152+4000162)
Mandatory Deposits	(400007+400017)
Other Deposits	(4000018+4000028+4000038+4000048+4000058+4000068+4000078+4000088+4000098+4000108+4000118+4000128+4000138+4000148+4000158+4000168)
B. NON-RESIDENT DEPOSITS
Demand Deposits	(4001010+4001021+4001110+4001120)
Deposits with Notice	(4001012+4001022+4001111+4001121)
Time Deposits	(4001012+4001023+4001112+4001122)
Mandatory Deposits	(400113+400103)
Other Deposits	(4001013+4001024+4001113+4001123)
C. STATE DEPOSITS
From the Administrative Public Sector	(4000000+400010)
TOTAL		Sum Balances X	Sum Balances X+1	Sum Balances X+2	Sum Balances ...	Sum Balances X+n	Sum Averages (M)

Levy Base | Mandatory Reserve for the Period