Resolution 146/97 - Correspondency Regulation

BOARD RESOLUTION NO. 146/97 SUBJECT: CURRENCY AND CREDIT - CORRESPONDENCY REGULATION.

HAVING SEEN: Law No. 1670 dated October 31, 1995. Supreme Decree No. 23334 of November 30, 1992. Technical Report No. 15/97 of August 20, 1997. Legal Report ALEG No. 128/97 of September 2, 1997.

CONSIDERING: That it is necessary to regulate the correspondency operations of the Central Bank of Bolivia and the system for contracting them.

That Law 1670 in its articles 24, 29 subsection g), 37 and 38 subsections a), c) and f), establishes that the Central Bank of Bolivia may delegate, through competitive mechanisms, the administration of fiscal accounts to other banks and financial entities.

That Supreme Decree No. 23334, in its Article 2, authorizes the Central Bank of Bolivia to bid out through public call the banking services of correspondency.

That according to Report ALEG No. 128/97, the Board is empowered to approve the Correspondency Regulation.

That Report No. 15/97 from the Currency and Credit Management recommends approving the aforementioned regulation.

//2. B.R. No. 146/97 Therefore, THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA RESOLVES:

Article 1.- Approve the attached Correspondency Regulation in its 7 chapters and 18 articles.

Article 2.- The aforementioned Regulation will enter into force on October 1, 1997.

Article 3.- The Presidency and General Management are charged with the execution and compliance of this Resolution.

2.IX.97

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Juan Antonio Morales A.

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Armando Pinell S. Jaime Ponce G.

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Juan Medinacelli V.

//3. B.R. No. 146/97 CORRESPONDENCY REGULATION

CHAPTER I TERMS AND DEFINITIONS

Article 1 (Terms and Definitions). The terms and definitions applicable to this Regulation are as follows:

C.B.B.: Central Bank of Bolivia CORRESPONDENT: Bank that acts in a location by mandate of another and charges a correspondency commission. E.F.A.: "Banks Authorized as Accredited Financial Entities", according to the Regulation approved by B.R. No. 117/97 of June 10, 1997. S.B.E.F.: Superintendence of Banks and Financial Entities.

CHAPTER II OBJECT

Article 2 (Object of the Regulation). This Regulation aims to regulate the correspondency operations carried out by financial entities by contract with the C.B.B. It also establishes the procedure for contracting banks to provide correspondency services on behalf of the C.B.B.

Article 3 (Attribution of the Central Bank of Bolivia). The correspondency operations contracted by the C.B.B. with financial entities fall under the power granted by articles 24, 29, subsection g), 37 and 38 of Law 1670, and S.D. 23334 of November 30, 1992.

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CHAPTER III OPERATIONS

Article 4 (Type of Operations). The operations to be executed by financial entities by virtue of a correspondency contract on behalf of the C.B.B. are, by way of enumeration and not limitation, the following:

4.1. Treasury Services.

4.2. Receipt of deposits for the C.B.B. in cash, with own or third-party checks, and through transfers of any kind, electronic or otherwise.

4.3. Payment of checks.

4.4. Maintenance of Funds in Custody of the C.B.B. in its vaults, separated from its own funds.

4.5. Receipt and sending of money orders and fund transfers to other locations.

4.6. Handling the opening of letters of credit and other operations related to foreign trade.

4.7. Custody receipt of deposits of securities, commercial documents, titles, and others.

4.8. Payment of checks for public officials and veterans of the Chaco War.

4.9. Other services that the C.B.B. decides to execute.

CHAPTER IV CONTRACTING PROCEDURE

Article 5 (Public Bidding). The C.B.B. will contract the correspondency services mentioned in Article 4 of this Regulation through public bidding.

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Article 6 (Public Call). The call for the Public Bidding will be directed to financial entities authorized by the S.B.E.F. and qualified by the C.B.B. as EFA, to present their offers based on a set of conditions that will be prepared for this purpose by the C.B.B., in compliance with the Basic Standards for the Acquisition of Goods and Services, approved by Supreme Resolution No. 21645 of August 3, 1995, or subsequently modified.

Article 7 (Minimum Requirements). Banks wishing to participate in the public call for correspondency services must meet, at a minimum, the following requirements:

7.1. Have infrastructure that allows handling separately the operations outlined in Article 4.

7.2. Have a checking account system in all its offices, branches, and/or agencies, that allows showing the movements of public sector accounts separately and with the capacity to generate daily information.

7.3. Have a physical space in the vaults of each office for the safeguarding of public sector funds and funds in custody of the C.B.B., separated from its own funds and with maximum security.

7.4. Have insurance that covers all risks of loss of funds corresponding to fiscal funds, funds in custody, and others of the C.B.B.

Article 8 (Requirements for Submission of Proposals). The legal requirements for the submission of proposals are those established in the Basic Standards for the Contracting of Goods and Services.

Article 9 (Evaluation of Proposals). In the evaluation of proposals, the following information will be taken into account:

a) Characteristics of the service b) Number of agencies c) Communication and IT infrastructure.

//6. B.R. No. 146/97 d) Investment plan. e) Physical security. f) Other specifications established according to the type of service. The weighting of this information in the evaluation will be established in the Set of Conditions corresponding to each bidding process.

Article 10 (Award of Correspondency Services). Among the companies qualified by the C.B.B. for correspondency services, the award will be made to the EFA whose average cost of the correspondency service is the lowest. To determine the average cost of services, the corresponding weightings for each service will be incorporated into the Set of Conditions.

Article 11 (Cost of Service). The proposing EFA that is awarded a service commits to applying the proposed cost for the same during the validity of the contract.

Article 12 (Acceptance of Proposals from Syndicated Financial Entities). Proposals from syndicated financial entities will be accepted. In this case, the proposal must expressly state that the provision of the service will be the joint, indivisible, and several responsibility of the entities, through the signing of an accidental syndication association contract that grants powers to the financial institution that will act as the leader.

CHAPTER V CORRESPONDENCY OPERATIONS CONTRACT

Article 13 (Signing of the Service Provision Contract). The C.B.B. and the entity awarded as correspondent will sign a Service Provision Contract.

Article 14 (Duration of the Contract). The duration of the contract will be a minimum of three years and may be renewed for a similar period, prior to agreement of the parties.

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Article 15 (Subcontracting of Services). The awarded financial institution may subcontract the services of financial entities authorized by the S.B.E.F. to provide the correspondency service in districts or zones of the country where there are no bank branches or agencies. In this case, the financial institution must inform the C.B.B. and send it a copy of the contract. The responsibility for the provision of the service will be exclusive to the institution to which the provision of the correspondency service was awarded, and this institution may not, under any circumstances, disclaim said responsibility to the subcontracted financial entity.

Article 16 (Termination of Contract). If the correspondent financial entity is suspended indefinitely in its status as an EFA or if inadequate handling of funds belonging to the C.B.B. has been determined, the contract will be terminated through written communication from the C.B.B., without prejudice to the legal actions that correspond.

CHAPTER VI STATEMENTS AND REPORTS

Article 17 (Statements and Reports). The financial institution contracted to provide the service is obliged to provide the C.B.B. with information regarding:

17.1. Daily statements of the operational movement and balance of public sector accounts, including fiscal checking accounts and others, on magnetic media and/or through another electronic information system.

17.2. Signature records of each account with coverage throughout the territory of the Republic.

17.3. Other information expressly required by the C.B.B.

CHAPTER VII CONTROL AND MONITORING

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Article 18 (Control and Monitoring). The Internal Audit Unit of the C.B.B. will carry out the following controls on correspondent financial institutions:

18.1. Periodic audits.

18.2. Cash counts to verify the handling of C.B.B. monetary resources.

18.3. Review of books and auxiliary records of the accounting records related to the handling of funds in custody.

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