Deposit and other liability reserves

(1) Every licensed bank shall maintain on account in its name with the Central Bank a minimum balance which on average shall be equivalent to at least five per centum of its average deposit liabilities represented by demand deposits, plus at least three per centum of its average deposit liabilities not represented by demand deposits, or such higher proportion of such demand deposits or other deposit liabilities as may from time to time be prescribed or specified by the Central Bank by notice published in the Gazette or by thirty days prior notice in writing, provided that the percentage shall be the same for each licensed bank. Any change in the required percentage will be effective on the first day of the specified month. (2) The averages specified in sub-section (1) shall be computed as follows– (a) the average minimum balance shall be the daily average of amounts standing to the credit of the account established with the Central Bank under this section as at the close of business on each day of a month; 85 (b) the average amount of the deposit liabilities shall be the average of each such deposit liability as at the close of business on the four consecutive Wednesdays ending with the penultimate Wednesday of the preceding month. (3) The Central Bank may vary, by thirty days prior notice in writing to each licensed bank, the method to be used in computing the averages specified in sub-section (2), provided that such method shall be the same for each such bank. (4) The Central Bank may, by notice published in the Gazette or by thirty days prior notice in writing require each type of licensed financial institution to maintain on account in its name with the Central Bank a minimum balance in relation to the average of funds obtained by such financial institution from the public, in such amounts and upon such terms and conditions as the Central Bank may determine, provided that such requirements shall be the same for each type of licensed (5) Any licensed bank or licensed financial institution that contravenes this section may be ordered by the Central Bank in writing to pay a charge equivalent to ten per centum of the amount by which the actual daily average balance has fallen short of the required minimum average balance, and such charge shall be payable to the Central Bank on such date as may be fixed by the Central Bank and may be recovered by deduction from any balance of such bank or financial institution held with (6) Upon receipt of an order under sub-section (5), the licensed bank or licensed financial institution shall have ten days to object that such a contravention has not taken place, at the end of which period the Central Bank shall either confirm or revoke the order. 86 (7) The Central Bank shall not be required to pay interest on or remunerate in any way the minimum balances referred to in sub-sections (1) or (4), but may do so in its sole discretion on such terms and conditions, which may themselves be subject to change or elimination, as it sees fit; provided that the terms and conditions of any such interest payment or remuneration shall be the same for each type of licensed financial institution.