Regulation No. 013/2015/BCC/DSBR on the Operation of the Credit and Payment Incident Central Registry

BANQUE CENTRALE DES COMORES

REGULATION NO. 013 /2015/BCC/DSBR

RELATING TO THE OPERATION OF THE CREDIT AND PAYMENT INCIDENT CENTRAL REGISTRY

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Having regard to the Statutes of the Central Bank of the Comoros;

Having regard to Framework Law No. 80-08 of May 3, 1980, relating to currency and the role of the Central Bank of the Comores in the control of banks, financial institutions, credit, and foreign exchange, specifically Article 15;

Having regard to Law No. 13-003-AU of June 12, 2013, regulating the activities of financial institutions, specifically Articles 45 and 103;

Having regard to the current regulations relating to payment means, systems, and incidents;

Having regard to Regulation No. 011/2015/BCC/DSBR of January 28, 2015, relating to the internal control device and risk management and control of credit institutions;

Having regard to Circular No. 03/2012/COB relating to the obligation imposed on credit institutions to register each of their clients with a unique identifier before December 31, 2012;

Considering the need to provide better visibility to credit institutions in their approach to clientele and to allow them to limit credit risks and incidents on payment means, the Central Bank has established a Credit and Payment Incident Central Registry.

THE GOVERNOR OF THE CENTRAL BANK OF THE COMORES

Sets the operational modalities of the Credit and Payment Incident Central Registry in application of Law No. 13-003-AU of June 12, 2013

Preamble

The "Credit and Payment Incident Central Registry," referred to as CdRIP, placed under the supervision of the Central Bank of the Comoros, consists of:

• A Credit Central Registry listing information on credits and banking facilities and the associated unpaid amounts linked to these commitments,
• A Payment Incident Central Registry listing infractions related to the use of payment means.

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The objective of this tool is to:

• Provide credit institutions with information on the solvency, debt level, and credit utilization level of applicants, facilitating the granting of credits and authorization of banking facilities,
• Identify bad payers,
• Reduce payment incidents to facilitate the development of the use of written payment means and their acceptability,
• Enrich the information required by the Central Bank for its banking supervision and study activities and provide it with visibility on the overall quality of the credit portfolio of the banking sector,
• Ultimately allow for the evaluation of companies in terms of solvency and signature quality,
• Prevent household over-indebtedness,
• Improve the use of checks and other payment means.

Article 1: Credit Institutions Adhering to the CdRIP

In accordance with Article 45 of the banking law, all credit institutions are required to adhere to the CdRIP, cover its operating costs, and provide all necessary information for its operation.

The modalities of this obligation to report to and consult the CdRIP are described below.

Article 2: Declaration Principles and Related Management Rules

Declaration in the Credit and Payment Incident Central Registry is done by:

• Extracting data from the information and management system of each credit institution and creating files in a standardized format defined in the document titled "Credit and Payment Incident Central Registry - Exchange Protocol with Credit Institutions," communicated by the Central Bank to credit institutions on April 30, 2014, to allow batch data transfer,
• Integrating these files into the Web interface of the Credit and Payment Incident Central Registry,
• Validating the data integrated into the Registry before transmission by the system to the database at the Central Bank level.

There are four categories of data files to be produced by credit institutions to feed the Credit and Payment Incident Central Registry:

• Economic agents (= clients),
• Credits established,

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• Commitment situations (= outstanding balances) and unpaid amounts on established credits,
• Payment incidents.

Article 3: Identification of Economic Agents

The identification of economic agents must be done in accordance with the provisions of the Central Bank's Circular No. 03/2012/COB of February 22, 2012, relating to the identification of the clientele of financial institutions.

For public administrations, public companies, embassies, and international organizations, identification will be done by the assignment of a unique code by the Central Bank for each economic agent.

Credit institutions must retain the supporting documents for identification, which may be subject to subsequent controls by the Central Bank.

Article 4: Declaration Rules for Economic Agents

Whether it is a new entry or a modification, the declaration rules for the clients of each credit institution are as follows:

• Each economic agent is recorded in the system using a unique identification number in accordance with the nomenclature mentioned in Article 3.
• This identification number is used to consolidate the commitments and/or payment incidents of all economic agents reported by credit institutions. This number constitutes the basis of the system.
• The identification of each economic agent at each credit institution will be done via a client PIN specific to them (for example, the client root included in the client's bank account number within the Credit Institution). This client PIN will serve to link an economic agent within a credit institution with its credit commitments, credit outstanding balances, unpaid credit outstanding balances, and payment incidents.

Article 5: Specific Rules Concerning Joint Accounts

Each member of a joint account must be declared and validated as an economic agent, with their own PIN. The linking will be done at the time of the credit declaration, where the PINs of each member of the joint account will be entered.

Article 6: Nature of Declaration Obligations in the CdRIP

Credit institutions are obligated to declare in the Credit Central Registry at minimum the following information:

• Credits:
  Obligation to make a prior declaration for any credit granted with an amount equal to or greater than 100,000 FC. Credit institutions may declare credits

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of less than 100,000 FC. This declaration can be made progressively and no later than before the consolidation date in the "monthly situations" (see below).
The "economic agents" beneficiaries of these credits must be previously entered into the database.

• Monthly Situations:
  The outstanding balance of these credits, called "situation," must be reported monthly.
  For certain cases, such as overdrafts, the amount to be declared is that of the overdraft authorization and not the account balance. Thus, the authorization will be declared as a credit and the debit balance will be included in the monthly situation.

• Unpaid amounts on these credits:
  Obligation to declare to the first franc, progressively and no later than before the consolidation date in the "monthly situations" (see below).

• Payment Incidents:
  Obligation to declare to the first franc as soon as the incident is observed.
  Regarding checks, only rejection reasons related to insufficient provision or absence of provision are to be taken into account.

Article 7: Nature of Consultation Obligations for Credit Institutions

Credit institutions are required to consult the CdRIP:

• before opening an account,
• during the preparation of each credit file.

Each consultation is traced in the system, which assigns a 6-digit code for each consultation:

• whether the consulted central registry is the Credit/Unpaid Central Registry or the Payment Incident Central Registry,
• whether the query succeeds or not.

The generated code must be systematically recorded by each credit institution on the corresponding internal document.

Article 8: Declaration Calendar

• Declarations concerning economic agents and credits
  There are no constraints, nor limits on the number of acts sent or volumes (multiple declaration files can be sent on the same day).

• Declarations concerning payment incidents
  The declaration must be made on the same day the incident appears, consistent with the results of the day's clearing.

• Monthly declarations of situations
  One declaration per month, covering the situation at the end of said month.

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This declaration is receivable from the 1st day of the month following the end of the declaration month and must be validated within 10 days thereafter; beyond this deadline, the CBC will apply penalties based on the number of days of delay (see Article 11).

On the night of the 10th to the 11th of each month, the system consolidates the situation files of all credit institutions for the previous month. For those who have not validated in time (i.e., within the 10 days following the end of the previous month), their situation for the previous month will be automatically carried over into the global centralization processing.

Regularization will occur at the next situation declaration.

Credit institutions must pay particular attention to the validation date of situations, an event that triggers the sending of files.

Article 9: Periods of Use of the CdRIP

• Data Entry and Consultation

  • Each credit institution can enter data and consult at any day/time.
  • Each credit institution can declare economic agents at any day/time, a credit at any day/time (the beneficiary economic agent must be declared beforehand).

• Validation of Declarations
  It is recommended to perform the validation of declarations during the working hours and days of the Central Bank, namely:

  • Monday to Thursday from 7:30 AM to 3:00 PM
  • Friday: from 7:00 AM to 11:00 AM.

  This limitation is not technical (data is configurable), but functional, fixed in the interest of credit institutions. Indeed, in case of a problem during validation, the Central Bank can thus react actively, exchange with credit institutions, and provide instant feedback, knowing that the validation date will serve as the basis for calculating any potential late penalties.

Article 10: Operating Cost of the CdRIP and Billing Basis for Credit Institutions

The CdRIP is made available to credit institutions free of charge.
The investment corresponding to this project was covered by the Sectoral Development Fund for Banking and Finance, which benefited from budgetary aid from France.

However, a contribution to the operating costs of the CdRIP will be applied to each credit institution, the objective being to ensure simple financial equilibrium of the system during the operational phase.

The billing base, agreed upon with credit institutions, includes:

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• General costs borne by the Central Bank,
• Depreciation of computer hardware and software (excluding the CdRIP solution software itself) – from 2014 to 2018,
• Depreciation of implementation costs (2014 to 2018),
• Annual maintenance of the solution.

Article 11: Principles for Calculating Billing to Credit Institutions

• The billing modalities agreed upon with credit institutions concluded the need to combine a fixed part and a variable part.
  Billing therefore consists of:

  • a fixed lump-sum part set at 1/3 of the annual forecast budget for expenses established based on market shares (defined as the share of each credit institution, at the end of each fiscal year, in the average of credit outstanding balances);
  • a variable part based on the number of consultations covering 2/3 of the annual forecast budget for expenses.
    The cost per consultation was set at 2,500 KMF, a tariff which, according to estimates made for the first year, is likely to trigger modest end-of-year adjustments. This pricing can be modified by mutual agreement between credit institutions and the Central Bank.

• The calculated billing amount will be subject to a quarterly deduction from the account of each Credit Institution held at the Central Bank.

• At the end of each year, a comparison will be made between the costs actually borne by the Central Bank and the amounts paid by credit institutions.
  An adjustment may be made:

  • In case of insufficient coverage of costs borne by the Central Bank, the complement will be billed to credit institutions,
  • In case of a surplus, the excess will be redistributed to credit institutions, according to the distribution key used for calculating the lump-sum part (or retained as a reserve usable to cover deficits in subsequent years).

• For the following year, if necessary and after discussion, a new rule will be applied to get as close as possible to anticipated actual costs.

This solution has the advantage of encouraging frequent but appropriate use of the CdRIP, while respecting the principles of simplicity, equity, and scalability.

Article 12: Non-Compliance with the Provisions of this Regulation

Non-observance of the provisions of this regulation, particularly in case of failure to declare credits, unpaid amounts, or payment incidents, or in case of false

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declarations, will result in disciplinary sanctions as provided for in Articles 64 to 66 of the banking law.
In case of delay in monthly situation declarations, credit institutions may be subject to a penalty of 150,000 FC per day of delay starting from the 11th of the following month until the date the situation declaration is made.

Article 13: Entry into Force

This Regulation enters into force upon its signature.

Moroni, January 28, 2015

Mzé Abdou MOHAMED CHANFIOU