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31.03.2006

Regulation on credit standing facilities extended by the National Bank of Moldova to banks, approved by DCA of the NBM no.70 of March 23,2006

Published in the Official Monitor of the Republic of Moldova no. 51-54 of 31.03.2006, art.188

APPROVED
by Decision of the Council of Administration
of the NBM no. 70 of March 23, 2006

In force: April 21, 2006

Regulation
on credit standing facilities extended
by the National Bank of Moldova to banks

Amended by:

DCA of the NBM no. 235 of August 30, 2006, Official Monitor of the Republic of Moldova no.142-145 of 08.09.2006);
DCA of the NBM no.196 of August 02, 2007, Official Monitor of the Republic of Moldova no.131-135 of 24.09.2007);
DCA of the NBM no 36 of March 13, 2008, Official Monitor of the Republic of Moldova no.61- 62 of 25.03.2008);
DCA of the NBM no. 78 of April 30, 2008, Official Monitor of the Republic of Moldova no.86-87 of 16.05.2008) no.139 of 31.07.2008 (OM no. 171-173 of 12.09.2008).

 

I. General dispositions

1. The Regulation on credit standing facilities extended by the National Bank of Moldova to banks (hereinafter, the Regulation) has been worked out pursuant to Art. 4, 5, 11 and 18 of the Law on the National Bank of Moldova no.548-XIII of July 21, 1995, and regulates the modality of extending credit standing facilities by the National Bank of Moldova (hereinafter NBM), with a view of maintaining the liquidity of banks and ensuring timely payments performance.

2. NBM regulates through the present Regulation the following credit standing facilities extended to banks in Moldovan lei: intraday credits and overnight credits.

 

II. Definitions

3. For the purpose of the present Regulation the following terms shall be used:

Intraday credit - is a type of credit extended by BNM over the operational day, in form of overdraft drawings, under the collateral of securities pledged to NBM, for purposes of timely performance of current payments.

Overnight credit - is a type of credit extended to banks by NBM overnight, under the collateral of securities pledged to NBM, for purposes of covering the account shortage not paid at the end of the operational day, as well as of maintaining required reserves.

Eligible collateral - shall be formed of state securities and of Certificates of the National Bank of Moldova (hereinafter, securities) with the maturity of 5 to 91 days, registered at NBM in the Book Entry System (BES), owned by banks and accepted as the pledged collateral object within credit standing facilities extension.

Credit limit - represents the sum of intraday and overnight credits, which can be obtained by the bank within credit standing facilities.

 

III. Conditions of functioning of credit standing facilities
extended by the National Bank of Moldova to banks

4. Banks can benefit from intraday/overnight credits under conditions established by NBM as in accordance with the goals of NBM monetary policy. In this sense, NBM can set up the limit of intraday/overnight credits, including for each separate bank.
(P. 4 modified following the Decision of the NBM Council of administration no. 139, of 31.07.2008)

5. Intraday and overnight credits are extended in the maximal volume of securities reserved by the bank to be pledged to NBM, by transferring from account no. I to account no. III, sub-account 1 “Securities for pledging to NBM while obtaining intraday/overnight credits” (hereinafter, account no.III.1) of the Book Entry System at NBM, abiding by the credit limit established by NBM.

6. In order to benefit from intraday/overnight credits, the bank shall maintain a sufficient amount of securities on account no.III.1 in BES at NBM.

7. The bank has the right to supplement, over the operational day, the securities on account no. III.1 in BES at NBM and/or partially withdraw them with the NBM acceptance.

8. The volume of securities at nominal value, with the maturity of 5 to 35 days and of 36 to 91 days, representing the guaranty of intraday and overnight credits and of the related interest, must exceed the credit value by 5% and 10%, accordingly.

9. The mechanism of intraday and overnight credits pledged with securities is provided by the Regulation on book entry system of securities no.9/08, approved by the Decision of the Council of Administration of the National Bank of Moldova of February 02, 1996 (Official Monitor of the Republic of Moldova no. 26-27/28 of May 05, 1996), (hereinafter, Regulation on BES).

 

IV. General conditions of intraday and overnight credits extension

10. The National Bank of Moldova shall extend credit facilities to banks:

a) having concluded with the National Bank of Moldova:
- a Contract of credit standing facilities extension (Attachment no.1 to the Regulation);
- a Contract on participation in BES of the National Bank of Moldova and the respective additional agreements;
- a Contract on participation in the automated interbank payments system;
b) having reserved, according to the procedures set out in the Regulation on BES, on the respective accounts in BES at NBM, securities with the maturity of 5 to 91 days in an amount sufficient for obtaining intraday/overnight credits.
(P. 10 modified following the Decision of the NBM Council of administration no. 36, of 13.03.2008, in force on 25.04.2008)

11. The Contract of credit standing facilities (hereinafter, the contract) shall be concluded for an unlimited period of time.

12. Prior to the first request submission for overnight credit obtaining, the bank shall deliver to NBM the authorizations of persons authorized by the bank to perform overnight credit transactions and a letter with the information on the number of the analytic account opened with the bank’s registers for overnight credits record.
(P. 12 modified following the Decision of the NBM Council of administration no. 78, of 30.04.2008, in force on 30.05.2008)

 

V. Principles of extending and paying the intraday credit

13. The intraday credit extension over the operational day shall be carried out in case of money means shortages or due to its insufficiency on the settlement account opened for the bank participating in the Automated Interbank Payments System (hereinafter, AIPS).

14. The intraday credit shall be extended over the AIPS operational day, with the maturity on the same day.

15. Intraday credit is an account shortage over the operational day with a view of payments carrying out based on payment documents, exceeding the amount available on the account.

16. During the operational day the bank can benefit from more intraday credits, within the limits of the monetary policy established by NBM and of the available collateral.

17. No interest, commissions or other payments shall be charged on the intraday credit extended to the bank.

18. The intraday credit shall be extended to banks complying with the requirements stipulated in this Regulation and having reserved securities on account no. III, sub-account 1 in BES at NBM.
Upon intraday credit extension (overdraft acceptance on the bank’s settlement account), AIPS shall send the statement of account, if requested by the bank.
(P. 18 modified following the Decision of the NBM Council of administration no. 36, of 13.03.2008, in force on 25.04.2008)

19. During the current operational day, the intraday credit shall be primarily paid off (covering the account shortage) on the account of money means entry on the bank’s settlement account in AIPS.

20. Upon paying off the overdraft accepted on the bank’s settlement account, AIPS shall send, if requested by the bank, the statement of account.

21. The intraday credit cannot be extended for the overnight credit payment.

22. In the event the bank did not pay the intraday credit until the end of “Payments and clearing performance” stage of the AIPS Operational day program, this credit shall be re-concluded within the “Overnight operations” stage into an overnight credit without the acceptance of the bank, while securities pledged for the intraday credit shall be pledged for the overnight credit.

23. In case of intraday credit re-conclusion into overnight credit, NBM shall send the respective notification to the bank (Attachment no.4 to this Regulation).

 

VI. Overnight credit peculiarities

24. The overnight credit extension is determined by the following needs:
a) non-payment of intraday credit up to the end of “Payments and clearing performance” stage of the AIPS Operational day program;
b) insufficiency of money means on the bank’s LORO account for required reserves maintenance.

25. In the situation described under letter a) of p.24, the amount of the overnight credit shall be extended without the bank’s acceptance and shall be equal to the amount of intraday credit extended and non-paid until the end of the “Payments and clearing performance” stage of the AIPS Operational day program.

26. In the situation described under letter b) of p.24, the overnight credit shall be extended based on the bank’s request (Attachment no. 2 to this Regulation).

27. The overnight credit shall be extended on the current operational day based on the bank’s request, within the “Overnight operations” stage of the AIPS Operational day program.

28. The reimbursement term of the overnight credit cannot be extended.

29. The overnight credit interest shall be calculated for a 1-day term.

30. In case of overnight credit extension within the “Overnight operations” stage of the AIPS Operational day prior to free days or holidays, the banks shall carry out the interest payment for the de facto term of credit use, including for free days and holidays, at the interest rate of the overnight credit.

31. The interest rate for the overnight credit shall be set up by the Council of Administration of the National Bank of Moldova and shall be applied as of the enforcement date.

32. The interest rate on overnight credit shall be related to banks by NBM as according to the modification and shall be in force until the following modification.

33. The interest on term overnight credit shall be calculated for each day of credit use, according to the following formula:

where:
D – the sum of interest for overnight credit use,
S – sum of overnight credit,
Rd – interest rate for overnight credit use in percent value,
N – number of days of overnight credit use (N should not be smaller than 1).
The way of interest calculation according to the above formula shall be applied for credits with the term of 1 day for term credits extended on free days and holidays.

 

VII. Overnight credit extension and payment

34. The overnight credit shall be extended, based on the request, to banks complying with the requirements stipulated in this Regulation and having reserved securities on account no. III.1 in BES at NBM.
(P. 34 modified following the Decision of the NBM Council of administration no. 36, of 13.03.2008, in force on 25.04.2008)

35. The request for overnight credit shall be sent electronically by the bank using the “Interbank messages” system of the AIPS transportation component and shall be received by NBM during the AIPS operation program, but not later than 50 minutes from the “Overnight operations” stage of the AIPS Operational day program.

36. Requests received by NBM following the term established under p. 35, as well as requests including omissions and errors shall be rejected.

37. The submitted request shall not be withdrawn.

38. The incomplete insurance shall serve as basis for the refusal of overnight credit extension in the requested amount and the bank shall be given the respective notification. In this case, the credit may be extended in the amount of the available pledge, based on a new request submitted in the term established under p.35.

38¹. The request received by NBM, which complies with the conditions of overnight credit extension, the conditions of conclusion and submission to NBM according to pts. 26, 34-38, shall be considered as accepted.
(P. 38¹ introduced following the Decision of the NBM Council of administration no. 78, of 30.04.2008, in force on 30.05.2008)

39. NBM shall, based on the request accepted for overnight credit and eligible pledge obtaining, extend the requested credit, concomitantly, pledging to the National Bank of Moldova on account no. III. 2, securities representing the cover of credit and related interest reimbursement.

40. As a confirmation of overnight credit extension or of the request rejection, NBM shall, within the “Overnight operations” stage of the AIPS Operational day program, notify the bank on credit extension (Attachment no.3 to this Regulation) or on the Request rejection (Attachment no.5 to this Regulation), indicating the reason for rejection.

41. The entry of overnight credit amounts on the settlement accounts of banks in AIPS shall be performed along with the examination of requests.

42. Payment of overnight credits and related interests shall be carried out on the operational day following the day of credit obtaining, prior to other payments, based on the Payment order issued by NBM on behalf of the bank – holder of the settlement account, sent in AIPS before the beginning of the “Payments and clearing performance” stage of the AIPS Operational day program.

43. Payment of overnight credit obtained according to the request shall be carried out based on the payment order issued by NBM on behalf of the bank – holder of the settlement account, transaction code 108, having the priority 2 and shall be fulfilled prior to the beginning of the “Payments and clearing performance” stage of the AIPS Operational day program.

44. In order to pay for the overnight credit, obtained as a result of intraday credit re-conclusion, NBM shall issue, on behalf of the bank – holder of the settlement account, the payment order with transaction code 109, having the priority 2, which shall be fulfilled within the “Payments and clearing performance” stage following the payment order issued by NBM on behalf of the bank – holder of the settlement account with transaction code 108.

45. Partial payment of the overnight credit when due shall not be allowed.
(P. 45 modified following the Decision of the NBM Council of administration no. 235, of 30.08.2006, in force on 22.12.2006)

46. Interests related to overnight credits shall be collected by NBM from banks’ settlement accounts, based on the payment order issued by NBM on behalf of the bank – holder of the settlement account, with the transaction priority 2.

47. The overnight credit and related interests shall be paid in AIPS at 12:00 of the operational day following the day of credit extension.

48. Upon the payment of overnight credit and related interests, AIPS shall notify the bank on the fulfillment of the respective operation, by sending the copy of the payment order issued by NBM on behalf of the bank – holder of the settlement account.

 

VIII. Payment of overnight credits in case
of untimely performance of obligations by the bank

49. In case the bank did not secure on its settlement account in AIPS the amount sufficient to pay the debt on overnight credit and interest before 12.00 of the operational day following the day of credit extension, the credit shall be overdue and NBM shall incontestably collect the outstanding amount from the bank’s settlement account, including the penalties provided by section IX, while the pledged securities shall be transferred to account no. III, sub-account 3 in BES at NBM “Securities pledged to NBM for the extended credits” (hereinafter account no.III.3), as in accordance with the procedures provided by the Regulation on BES.
The overdue overnight credit shall be paid integrally or partially, depending on the availability of funds in bank’s settlement account in AIPS until total repayment of debt.
(P. 49 modified following the Decision of the NBM Council of administration no. 235, of 30.08.2006, in force on 22.12.2006)

50. Securities pledged on account no.III.3 in BES at NBM, following the admission of the outstanding debt on overnight credit and interest by the bank, shall be proposed by NBM to be sold through auctions, in their integral or partial volume, as deemed necessary by NBM, within 5 working days following the overnight credit term expiration, without the debit bank acceptance.

51. Securities selling, pledging on account no.III.3 in BES at NBM, as a result of the bank’s acceptance of the outstanding debt on overnight credit and interest, shall be performed through auctions carried out by NBM according to the procedures provided by the Regulation on open market operations of the National Bank of Moldova with state securities no.57 of 11.09.1997.
(P. 51 modified following the Decision of the NBM Council of administration no. 36, of 13.03.2008, in force on 25.04.2008)

52. All banks, except the banks with overdue credits, shall be accepted at auctions of pledged securities placement, with NBM having the right of collecting the sum for purchased securities from the accounts of buying banks, by payment order issued by NBM on behalf of banks – holders of settlement accounts. Based on the auction’s results, NBM shall send to the bank, whose securities have been sold, the notification on pledged securities selling for the overdue overnight credit (Attachment no.6 to this Regulation).

53. The sum collected from selling of pledged securities on overdue credits shall be used to pay overdue debts.
(P. 53. modified following the Decision of the NBM Council of administration no. 235, of 30.08.2006, in force on 22.12.2006)

54. Along with the realization of the pledge, the NBM shall further incontestably collect the overdue debt from bank’s settlement account in AIPS.
(P. 54 modified following the Decision of the NBM Council of administration no. 235, of 30.08.2006, in force on 22.12.2006)

55. In case securities available on account no. III.3 in BES at NBM reach, in the period of the outstanding debt, their maturity, the means obtained from their repurchase shall be directed towards the payment of total outstanding debts.

56. The payment of the bank’s outstanding debt shall be performed according to the following sequence: payment of debt on interests, payment of penalties and payment of debt on principal.

57. In case the means proceeding from the pledged securities realization or from repurchase of due securities from account no. III.3 in BES at NBM, are not sufficient for the payment of the bank’s outstanding debts (including the principal, interests and penalties), they shall be incontestably collected from the bank’s settlement account for the final debt payment.

58. The date of credit payment shall be considered the date when all payments for the principal, the related interest, as well as for the respective penalties were performed.

59. Securities pledged to NBM on account no. III.3 and not realized by NBM shall be taken out of collateral on the day of the total payment of principal, interest and penalties and shall be transferred on the bank’s account no. III.1 in BES at NBM.

60. AIPS shall send to the bank the copy of the respective payment document upon payment of the outstanding debt.
(P. 60 modified following the Decision of the NBM Council of administration no. 235, of 30.08.2006, in force on 22.12.2006)

 

IX. Restrictions and penalties

61. For each day of delay, the bank shall pay to NBM, in addition to the outstanding amount of overnight credit, an increased interest equal to the interest on 1-day overnight credit, in force on the date of provision, plus 0,05%, which shall be calculated according to the formula:

where:

D1 – sum of interest on outstanding overnight credit,
S1 – sum of outstanding overnight credit,
Rd –interest rate for the use of overnight credit in percent value,
N1 –number of days of the outstanding overnight credit.

(P. 61 modified following the Decision of the NBM Council of administration no. 235, of 30.08.2006, in force on 22.12.2006)

62. The National Bank of Moldova shall suspend the right of banks to use credit standing facilities extended by NBM for a period of 30 calendar days from the date of determining the perpetration of the following infringements:
- failure to observe legal and /or contractual commitments within the NBM monetary policy operations (issuance of NBM Certificates, open market operations with state securities, overnight credits and deposits);
- admission of a deficit of required reserves in Moldovan lei on Loro account with NBM in an amount of over 5% of the established level or failure to comply with the required reserves level on Loro account in an amount of up to 5% during two consecutive maintenance periods;
- exceeding, by three working days, of the term established for supplementing the required reserves account in foreign currency or in national currency.
(P. 62 modified following the Decision of the NBM Council of administration no. 36, of 13.03.2008, in force on 25.04.2008)

 

X. Final dispositions

63. The conditions of credit standing facilities specified in the present Regulation, along with the Contract of credit standing facilities extension and the Request for overnight credit obtaining accepted by NBM, constitute contractual commitments for the use of credit standing facilities extended by NBM.