Regulatory Alerts2003-10-21 | Resolución 116/2003Added · Updated
Resolution 116/2003
The Board of Directors of the Central Bank of Bolivia temporarily extends maximum liquidity credit terms for financial institutions using the first and second tranches of the Liquid Assets Requirement Fund (Fondo RAL) as collateral, allowing up to 28 days for the first tranche and 14 continuous or 20 discontinuous days for the second. The resolution also authorizes temporary liquidity credits up to 30% of the third tranche of the Fondo RAL, subject to a specific interest rate, a prohibition on granting new loans, and daily reporting requirements. Financial institutions must demonstrate exhaustion of first and second tranche resources and lack of negotiable titles before applying. These temporary modifications are effective from October 22, 2003, to December 20, 2003.
BOARD RESOLUTION NO. 116/2003 SUBJECT: ECONOMIC POLICY ADVISORY – APPROVES MODIFICATIONS TO THE LEGAL RESERVE REGULATION.
HAVING VIEWED: Law 1670 of October 31, 1995. The Consolidated Text of the Legal Reserve Regulation approved by Board Resolution No. 088/2000 of November 28, 2000, and subsequent modifications approved by Board Resolutions 049/2001 of June 5, 2001, 113/2001 of November 13, 2001, 120/2001 of November 29, 2001, 012/2002 of January 22, 2002, 074/2002 of July 2, 2002, 079/2002 of July 23, 2002, 123/2002 of October 22, 2002, 139/2002 of December 10, 2002, and 115/2003 of October 15, 2003. The Report from the Economic Policy Advisory APEC-INEP 055/03 of October 21, 2003. The Report from the Legal Affairs Management SANO No. 198/2003 of October 21, 2003.
CONSIDERING: That the Central Bank of Bolivia, in compliance with Law 1670, has established a Legal Reserve regime of mandatory compliance for Banks and Financial Intermediation Entities.
That the current Legal Reserve Regulation establishes the use of the first and second tranches of the Liquid Assets Requirement Fund (Fondo RAL) as collateral for liquidity loans, which together represent 70% of the Fondo RAL.
That the obligations of financial entities with the public have registered a significant contraction in the last month, an aspect that has determined that these entities have requested liquidity loans in both tranches of the Fondo RAL.
That the Economic Policy Advisory, through Report APEC-INEP No. 055/03, recommends, as a contingency measure, temporary modifications in the conditions related to liquidity credits with Fondo RAL collateral, to facilitate access to resources for financial entities in situations of temporary liquidity insufficiency.
That in virtue of the powers conferred by Article 54, subsections a) and q) of Law 1670, the Board of Directors of the BCB is authorized to modify the Legal Reserve Regulation as well as the BCB Regulations, by two-thirds of the votes of its total membership, without the need for any additional administrative act.
THEREFORE,
THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA
RESOLVES:
Article 1.- Liquidity Credits Tranches I and II: Temporarily extend the maximum terms of credits with collateral constituted by resources established by each financial entity in the reserve in titles, under the following terms: a) Up to twenty-eight days, renewable, for the first tranche. b) Up to fourteen continuous days or twenty discontinuous days during two consecutive reserve periods, for the second tranche.
The renewals of credits with collateral from the first and second tranche of the Fondo RAL will be carried out upon written request of the financial entities, prior to payment of accrued interest.
The COASIF may establish limits for liquidity credits of the first and second tranche, within the maximum terms fixed in subsections a) and b) of this Article.
Article 2.- Liquidity Credits Tranche III: Approve, on a transitory basis for all financial entities authorized for operation by the Superintendence of Banks and Financial Entities, the granting of liquidity credits for an amount up to 30% of the Fondo RAL corresponding to the third tranche.
The conditions governing this type of credit are as follows: a) The credits have a term not exceeding 14 days, renewable, upon written request of the financial entities and payment of accrued interest. b) The interest rate fixed for these operations will be the current rate established by the COMA for liquidity credits of the second tranche of the RAL plus 250 basis points. c) During the validity of these credits, the benefited financial entity may not grant any new loans. d) During the validity of these credits, the benefited financial entity must provide the BCB with daily and detailed information on the evolution of its entity's liquid assets and liabilities. The required information will be communicated to the debtor entity by the BCB's Financial Entities Management.
Article 3.- Financial entities requiring liquidity credits must submit a written request to the General Management of the BCB, justifying the reasons for the requirement, demonstrating the lack of negotiable titles from the TGN and BCB, and having exhausted resources from tranches I and II.
Article 4.- The BCB's Financial Entities Management will report weekly to the COASIF on the granting of credits included in Articles 1 and 2 of this Board Resolution.
Article 5.- Those provisions of the Legal Reserve Regulation that are not within the scope of the temporary modifications approved by this Board Resolution remain unchanged.
Article 6.- These present modifications enter into force from October 22, 2003, until December 20, 2003.
Article 7.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.
La Paz, October 21, 2003
Juan Antonio Morales A.
Juan Medinaceli V. Enrique Ackermann A. José Luis Evia V.
Fernando Paz B. Jaime Apt B.
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