Central Bank of Seychelles Operational Guidelines for Policy Tools: Standing Facilities

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Norman Simmons
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1 Operational Guidelines for Policy Tools: July 2017

2 1.0 Introduction These guidelines sets out the Central Bank 1 s (thereafter referred to as the Bank) principles on the in line with the policy direction which is based on the active management of liquidity within the banking system and comprises of the Standing Credit Facility (SCF) and the Standing Deposit Facility (SDF). The two facilities shall serve as a corridor with the aim of steering short-term interest rates. The SCF is an overnight collateralised lending facility that provides funds to the eligible ODCs (Other Depository Corporations), at a predetermined interest rate, so as to cover end-of-day shortfalls that may arise in the daily settlement of payments and for the purpose of the MRR maintenance. The SDF is an overnight deposit facility and allows the ODCs to place excess funds for remuneration at their request, also at a predetermined rate set by the Bank. The Bank reserves the rights to amend any of the provisions in the document on the basis of its monetary policy stance and/or to reflect market conditions with ODCs notified of any change in advance. These guidelines supersedes and replaces all previous guidelines on the published by the Bank. 2.0 Eligibility for the The eligibility criteria for making use of these facilities are as per the Monetary Policy Framework 2 (MPF). At their own discretion the ODCs may make use of these facilities. ODCs will not be granted access to make use of both facilities within the same day on all business days. 1 Thereafter referred to as the Bank. 2 The Monetary Policy Framework document is available on CBS website at 2

3 3.0 Procedural Instructions for the 3.1 Access to Facilities Access is limited to the time of hrs on all business days. In the event of early closing, the access window shall be one (1) hour before closing time. The Bank may after informing the ODCs at least twenty four (24) hours beforehand change the access time and/or the duration of the access window. Participating ODCs shall be advised on the outcome of any request within thirty (30) minutes after closure of the access window. 3.2 Term of the Facilities The Bank will provide the facilities on an overnight 3 basis. Transactions will be settled on the same business day the application is made and will mature the following business day. 3.3 Interest Rate on Facilities The interest rates on the facilities shall be published on the Bank s website and via notices. Revisions to the rates on any of the facilities shall be announced on a quarterly basis following decision on the monetary policy stance for the subsequent quarter or as and when approved by the Bank. 3.4 Application for the Facilities The request is to be sent via the web portal. In the event that the web portal is not functioning this can be done by (omo@cbs.sc), facsimile ( ) or hand delivered, addressing the Head of the Financial Markets Division (FMD). For submission via , only requests with the ODC s extensions will be accepted. Furthermore, requests must be confirmed via telephone. ODCs may also scan and signed requests by two authorised signatories, followed by hand-delivering the original. 3 Not counting the non-business days. 3

4 (v) (vi) Submissions must contain; a. the ODC s details; b. choice of SCF or SDF and the amount; c. the applicable collateral(s) as per the MPF to be pledged if the request is for an SCF; and d. the necessary authorised signatories. Any submission made is considered final and irrevocable. 4.0 Procedural Instructions for the Standing Deposit Facility (SDF) 4.1 Limit No limit is set on the amount an ODC can place on the SDF. 4.2 Settlement Upon receipt of the request, the ODC s demand deposit account held at the Bank will be debited by the amount as per the request, to its SDF account within one (1) hour after closing of the window. 4.3 Payment upon Maturity Payment of the principal amount and the interest earned under the facility will be made on the following business day, to the ODC s demand deposit account held at the Bank. If the maturity date falls due on a non-business day 4, payment shall be effected on the following business day, without any additional interest or other sum in respect of such. 5.0 Procedural Instructions for the Standing Credit Facility (SCF) 5.1 Limit No limit is set on the amount an ODC can place on the SCF, subject to the collateral requirements outlined under clause 5.2 below. 5.2 Collateral Requirements 4 Public Holidays and weekends 4

5 Any SCF shall be backed with sufficient and eligible collaterals. Eligible assets that qualify as collaterals for the SCF are listed in the relevant section in the MPF, as well as in the respective guideline on Values of Collaterals and Applicable Haircuts. The value(s) of the collateral(s) will be calculated as per the document on Values of Collaterals and Applicable Haircuts. The application made will also be taken as authorisation to pledge the collateral(s) listed. 5.3 Settlement Once the collateral has been verified, the account of the ODC will be credited at most an hour with the amount specified in the request. Settlement of transactions will not be effected prior to receipt of all required information. In the event that the value of the submitted collateral does not match or is less than the awarded credit, the ODC will be notified. If an ODC is unable to transfer sufficient amount of collaterals to settle the amount of credit requested, a penalty may be imposed on the ODC. 5.4 Payment upon Maturity On the following business day, the ODC s demand deposit account will be debited with the principal amount and the interest incurred under the facility. If the maturity date falls due on a non-business day, payment will be effected on the following business day, without any additional charge or other sum in respect of such. At the same time, the pledge on the submitted collateral(s) will be removed. 6.0 Penalties In the event of non-compliance to the obligations laid out in these guidelines, the ODC shall be liable to the relevant clause of the MPF pertaining to penalties. 5

Central Bank of Seychelles Operational Guidelines for Policy Tools: Minimum Reserve Requirement

Central Bank of Seychelles Operational Guidelines for Policy Tools: June 2017 1.0 Introduction The (MRR) provides a simple and effective mechanism to alter the supply of total liquidity in the system.