Revised Laws of Saint Lucia (2023)

PART VIII
RELATIONS WITH FINANCIAL INSTITUTIONS

30.   Banker's bank

The Bank may open accounts for, and accept deposits from financial institutions doing business in the territories of the Participating Governments under such terms and conditions, including the payment of interest and the establishment of charges thereon, as the Board may from time to time determine.

31.   Discounts and rediscounts of bills etc

The Bank may—

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   (1)     purchase from, sell to, discount and rediscount for financial institutions bills of exchange and promissory notes drawn or made for bona fide commercial, industrial or agricultural purposes, bearing 2 or more good signatures at least one of which shall be that of a bank and maturing within 91 days from the date of their acquisition by the Bank: Provided that bills of exchange and promissory notes drawn or made for the purposes of financing seasonal agricultural operations or marketing of crops shall mature within 182 days from the date of their acquisition;

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   (2)     grant to financial institutions advances, whether by loans or overdrafts, for periods not exceeding 91 days secured by—

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      (a)     instruments specified in paragraph (1) of this Article;

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      (b)     warehouse warrants and documents of title issued in respect of staple commodities or other goods duly insured: Provided that the Bank shall determine from time to time the maximum percentage of advances in relation to the current value of such commodities or goods;

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      (c)     holding of any such assets that the Bank is permitted to buy, sell or deal in under paragraph (a) and (b) of Article 26 of this Agreement;

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      (d)     treasury bills and securities issued or guaranteed by any of the Participating Governments or its agencies, subject as provided in Article 40 of this Agreement:

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   Provided that in the case of advances granted under paragraph (e) for the specific purposes of promotion of those sectors which are deemed by the Bank to be priority sectors in the economies of the territories of the Participating Governments, the Board may authorise the extension of such advances up to a period of 12 months.

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   (Amended by S.I. 48/1991)

32.   Conditions for credit transactions

The Bank shall fix from time to time its rates for discounts and rediscounts. It may establish differential rates and ceilings for various classes of transactions or maturities.

33.   Reserve requirements

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   (1)   With the approval of the Council the Bank may, from time to time, prescribe either—

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      (a)     by written notice to the main office of each financial institution in the territories of the Participating Governments; or

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      (b)     by publishing in newspapers of general circulation in the territories of the Participating Governments or in the Official Gazette of each territory,

the maintenance of required reserves, including marginal required reserves, against deposit and other similar liabilities specified for this purpose. Such reserves shall be maintained either by way of cash holdings with each financial institution or by way of deposits with the Bank.

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   (2)   With the approval of the Council the Bank may require financial institutions of a given class or classes to hold such securities (including securities that may be issued by a Participating Government as provided in Article 40, paragraph (2) subparagraph (b) of this Agreement in substitution for its liabilities to financial institutions in respect of special deposits), issued or guaranteed by one of more of the Participating Governments, as the Board may designate for purposes of this Article in amounts not to exceed 10% of such institutions' deposits and similar liabilities.

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   (3)   The Bank may prescribe different reserve ratios for different classes of deposit and other similar liabilities and may prescribe the method of their computation: Provided that—

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      (i)     the total amount of reserves that the financial institutions are required to hold shall be such percentage of the total deposit and other similar liabilities to which reserves ratios have been made applicable, as the Council may determine from time to time,

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      (ii)     the reserve ratios shall be uniform for all banks and for all credit institutions although the ratios may differ between the 2 classes: Provided that in the case of banks or credit institutions incorporated in any of the countries of the Participating Governments, and in respect of which at least 75% of the shares are locally owned, the Bank may allow such banks or institutions a period not exceeding 3 years to attain the Bank's reserve requirements,

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      (iii)     any such prescriptions of, or increases in, the required reserve ratios shall be effective only after at least 15 days notice thereof has been communicated to the financial institutions,

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      (iv)     reserves held as demand deposits with the Bank, may under such regulations and subject to such charges as may be prescribed by the Bank, be withdrawn temporarily by the financial institutions for the purposes of meeting their existing liabilities and may further serve as a basis for the clearance of cheques and the settlement of balances among financial institutions.

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   (4)   The Bank may impose on any financial institution that fails to maintain required reserves in accordance with paragraphs (2) and (3) of this Article a charge at a rate of eleven point five percent on the amount of the deficiency for so long as the deficiency continues. Such charge shall be payable to the Bank on such date as may be prescribed by the Bank and may be recovered by deduction from any balance of the financial institution held by the Bank. (Substituted by S.I. 16/2017)

34.   Regulation of interest rates

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   (1)   The Bank may, from time to time prescribe either—

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      (a)     by written notice to the main office of each financial institution in the territories of the Participating Governments; or

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      (b)     by publication in newspapers of general circulation in the territories of the Participating Governments or in the Official Gazette of each territory—

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         (i)     the method of computation and minimum and maximum rates of interest payable in respect of deposit and other similar liabilities,

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         (ii)     the permissible purposes, aggregate ceilings, maximum amounts beyond which the Bank's approval is necessary, maximum maturities and maximum interest chargeable, and minimum cash, margin or security required, in respect of—

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            (A)     the making of advances whether by loans or overdrafts and investments,

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            (B)     the discounting of bills and notes,

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            (C)     the issuing of letters of credit,

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            (D)     the granting of acceptances and other credit, and

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         (iii)     the manner of the disclosure to the public and to—

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            (A)     each depositor in a financial institution the effective annual interest rates payable in respect of deposits made therewith,

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            (B)     each person to whom credit is extended the effective annual interest rate payable in respect thereof;

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   Provided that prescriptions under clauses (i) and (ii) shall require a decision of the Board, adopted by ²/₃ of all the appointed Directors who, in taking that decision, shall take cognisance of such general guidelines as the Council may indicate.

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   (2)   In any prescription by the Bank under this Article the Bank may, for purposes of determination of the maximum interest chargeable under (b)(ii) or in order to arrive at the effective annual interest rate payable by any person under (iii)(B), require that the method of computation should include any service or other charges payable in respect of the credit extended by the financial institution.

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   (3)   On the recommendation of the Board, adopted by ²/₃ of all of the appointed members, and the approval of Council adopted by ²/₃ of all its members, the provisions of paragraph (1) of this Article may be applicable in the manner therein indicated to every person, having as a principal object the extension of credit to the public generally or to particular members thereof, who in the ordinary course of business, during any calendar year extends as a minimum such amount of credit as is specified in the decision. The Bank may examine the accounts, books and papers of any person that it has reason to suspect is extending or has extended credit in violation of this paragraph and the refusal to submit such accounts, books and papers shall be prima facie evidence of such violation.

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   (4)   Notices issued under this Article shall come into effect on such date specified not earlier than 30 days after the issue date. The Bank in its notices may differentiate, according to the nature of their business, between banks and other financial institutions as well as other creditors or classes thereof in respect of items set out in paragraph (1) of this Article.

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   (5)   The Council may authorise or require the Bank to apply different prescriptions under clauses (i) and (ii) of paragraph (1) (b) of this Article in respect of the territories of the Participating Governments according to their different economic circumstances: Provided that any prescriptions purporting to relate to the different economic circumstances of the territory of any Participating Government should have the support of the Participating Government concerned.

35.   Information to be furnished by banks etc

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   (1)   Every financial institution shall furnish to the Bank at such time and in such manner as the Bank may prescribe, such information and data as the Bank may require for the proper discharge of its functions and responsibilities and in order to verify compliance with directions issued under Article 33 and 34 of this Agreement the Bank may require any person who is or has been made subject thereto to open his books for inspection.

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   (2)   Without limiting the generality of paragraph (1) of this Article every financial institution shall, at the request of the Bank, in relation to that financial institution's operations in the territory of a Participating Government, submit to the Bank in such form as the Bank may from time to time approve—

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      (a)     not later than 14 days after the last day of the month to which it relates, a monthly statement of assets and liabilities at the end of each month;

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      (b)     not later than 14 days after the end of the quarter to which it relates, a quarterly return providing an analysis of customers' liabilities to the financial institution in respect of loans, advances and other assets of the financial institution at the end of each quarter;

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      (c)     within such period as the Bank may determine such other returns as the Bank may require;

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   Provided that the Bank may in writing extend the period for the furnishing of such statements and returns.

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   (3)   The Bank may require a financial institution to submit such further information and data relating to the statements and returns described in paragraph (2) of this Article and such further information and data shall be submitted within such period and in such manner as the Bank may require.

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   (4)   All statements and returns submitted by a financial institution under sub-paragraph (b) or (c) of paragraph (2) hereof and any data or information submitted by a financial institution under those provisions or under paragraph (1) hereof, shall be regarded by the Bank as secret provided that—

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      (a)     the Bank may—

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         (i)     provide international financial institutions, foreign banking supervisors and any other local or foreign authorities responsible for the supervision or regulation of a licensed financial institution, or for maintaining the integrity of the financial system with such statements, returns, data and information; and

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         (ii)     provide access, to any officer of a foreign authority responsible for the supervision or regulation of licensed financial institutions in order to assess the safety and soundness of a foreign financial institution,

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           on a reciprocal basis and subject to an agreement for confidentiality and a Memorandum of Understanding;

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      (b)     the Bank may publish statements on the assets and liabilities of each financial institution furnished under sub-paragraph (a) of paragraph (2) but no information in respect of the affairs of a particular customer of a financial institution shall be so published.

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      (Substituted by S.I. 16/2017)

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   (5)   At the request of a Participating Government, the Bank shall arrange for that Government to be supplied with a copy of any statement or return furnished by a financial institution under paragraph (2) in relation to its operation in the territory of that Government and all statements and returns so supplied shall be regarded by the Government as secret. (Renumbered by S.I. 16/2017)

36.   Arrangement for clearing house

The Bank may at a suitable time in conjunction with other banks organize clearing houses in such places as may be desirable.