## 1codea2022004

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---

### Preface — mission, scope, and participants
- FSSR mission (virtual mode) conducted during January 5–28, 2022 by the IMF Monetary and Capital Markets Department (MCM).
- Mission led by David Blache (MCM) and supported by Ivan Guerra (MCM), and external experts Amel Ben Rahal, Olivier Frécaut, François Gomez, Jennifer Long and Anatol Monid.
- STA conducted a financial soundness indicators (FSI) assessment in February 2022. World Bank conducted an FSAP development module mission in February 2022.
- Scoping mission August 2021 agreed FSSR coverage: (i) financial sector regulation and supervision; (ii) crisis management and the financial safety net; (iii) bank stress tests; (iv) the financial stability mandate and macroprudential policies; (v) financial stability implications of financial sector deepening and financial inclusion; and (vi) gender mainstreaming in financial supervision.
- Closing meeting on February 4 chaired by Dieudonné Firiki Alimasi, First Vice-Governor of the BCC.

### Summary — key macrofinancial vulnerabilities and diagnostic findings
- Five macrofinancial vulnerabilities:
  - (i) weakness of the banking system’s capital;
  - (ii) difficulty in evaluating nonperforming loans (NPLs) following the COVID-19 measures;
  - (iii) risks related to financial dollarization;
  - (iv) breakdown of correspondent banking relationships (CBRs) because of “de-risking”;
  - (v) bank subsidiaries in the DRC holding surplus funds with parent companies abroad.
- Bank stress-testing: insufficient data prevented definitive conclusions, largely due to lack of transparency in credit restructurings under 2020 regulatory easing measures.
- BCC adopted exit measures in December 2021 with specific reporting requirements; near-term TA needs to anticipate NPL impacts likely underestimated.
- Preconditions for effective stress-testing TA:
  - identify a stress-testing committee or unit to receive training through TA;
  - prepare data tables and queries for stress tests after COVID-19 measures are lifted.

### Financial regulation and supervision — diagnostic and action priorities
- DSIF has basic tools for risk-based supervision consistent with 2014 FSAP recommendations; remaining actions include:
  - fully integrate the rating system (SYSNOB) into bank supervision;
  - upgrade early warning indicators and early intervention processes;
  - rapidly evaluate NPLs once 2020 regulatory easing measures are lifted (per December 2021 regulation);
  - conduct onsite audits when health conditions permit;
  - revise banking regulations to align with the new banking law once adopted;
  - draft an instruction consolidating rules on transactions with related parties;
  - continue actions on operational risk, IT risk and cyber risk;
  - implement Basel III in respect of liquidity risk in the longer term;
  - establish prudential regulations for payment institutions.

### Crisis management and financial safety net — diagnostic and action priorities
- Key areas needing attention:
  - sequential and proportionate implementation of the new framework for banking crisis prevention and resolution;
  - manage BCC’s conflicts of interest through functional separation of supervision, resolution, and ELA;
  - integrate a loss-of-CBRs scenario into recovery planning;
  - update cross-border cooperation agreements to integrate recovery and resolution planning;
  - ensure resolution tools are supported by a resolution funding mechanism;
  - modernize emergency liquidity assistance (ELA) by the central bank;
  - establish a credible and viable deposit insurance system subject to preconditions.

### Financial stability mandate and macroprudential policies — diagnostics and main recommendations
- Legislative shortcomings to be addressed by the draft banking law.
- BCC’s financial stability function and macroprudential policies need to be constructed; essential steps:
  - start work of the Financial Stability Committee (FSC) and appoint the chair of the FSC Technical Secretariat;
  - create a dedicated financial stability unit, then an enlarged structure to develop macroprudential strategy and operations in five stages (indicator selection, vulnerability assessment, instrument selection/calibration, implementation, evaluation);
  - reporting of FSIs for the first time and finalize FSI system in 2022 after STA validation;
  - overhaul the credit register (centrale des risques) and design dashboards and granular reporting;
  - consider organizational placement of Financial Stability Department (options: macro/money policy branch; within supervision; autonomous function reporting to decision-making bodies).

### Banking sector context, key statistics, and structure
- Total financial assets: 24.7 percent of GDP (2021).
- Bank assets: 97 percent of the financial system.
- Bank types: local (4), pan-African (9), international (2).
- Two banks hold 55 percent of the banking system’s assets.
- Geographic concentration: about 90 percent of loans located in Kinshasa and Haut-Katanga (2 of 26 provinces).
- Credit penetration and portfolio composition:
  - Credit/GDP ratio: about 7.5 percent at end-2020 (world average: 147.6 percent).
  - Foreign currency loans: average of 89.2 percent of portfolio over past five years.
  - Sectoral distribution of credit: “Other” (primarily households) 25 percent; “Mining” 24 percent of total credit.
- Deposits and funding:
  - Total deposits: from US$5.63 billion in March 2020 to US$10.33 billion in September 2021.
  - Current accounts: 62 percent of deposits.
  - Foreign currency deposits: about 85 percent of total deposits in September 2021.
- Profitability and costs:
  - Interest margins: over 10 percent.
  - Aggregate net earnings: negative in 2020; expected to improve significantly in 2021.
  - Taxes, parafiscal charges, and annual supervisory fees: 0.6 percent of total deposits.

### Capital adequacy, capitalization needs, and solvency results
- Aggregate capital adequacy ratio: 14 percent in 2020; fell to 12.1 percent as of end-September 2021.
- Solvency ratio remained above 20 percent until mid-2017 but fell due to growth of risk-weighted assets while regulatory capital remained essentially unchanged.
- Number of undercapitalized banks (basic solvency requirement 10 percent): three banks as of report; one undergoing transformation into a microfinance institution; corrective actions underway at the other two.
- Undercapitalized at 12.5 percent requirement (basic solvency ratio + capital conservation buffer of 2.5 percent as of end-2021): four more banks.
- Eight out of 15 banks satisfied current minimum capital requirement of US$30 million.
- Solvency evaluation (excluding restructured/rescheduled claims or collateral): systemwide capital adequacy falls to 11 percent.
  - Two more banks undercapitalized under CAR of 10 percent (total five).
  - Two additional banks undercapitalized under CAR of 12.5 percent (total seven).
- Recapitalization needs at end-2021:
  - US$25.5 million at a 10 percent requirement; and
  - US$149 million at a 12.5 percent requirement.
- Minimum leverage ratio: 5 percent.
- Minimum capital requirement will increase from US$30 million to US$50 million, postponed to January 1, 2025 with staged increments: US$5 million on January 1, 2023; US$5 million on January 1, 2024; and US$10 million on January 1, 2025.
- As of end-September 2021, four banks had own funds of more than US$50 million, but seven had not yet attained US$30 million.

### Nonperforming loans, provisioning, and COVID-19 measures
- NPLs: 8.5 percent of total loans.
- System provisioning: 69.2 percent of NPLs (loan loss reserves as percent of NPLs).
- BCC Instruction 16 provisioning rates:
  - Sound: 1
  - On watch: 3
  - Pre-doubtful: 20
  - Doubtful: 50
  - Compromised: 100
- COVID-19 regulatory easing (Instruction 44, March 2020) allowed freezing of loan-classification rules and unlimited credit restructuring; suspension of late payment penalties; incentives for restructuring; granting of grace periods.
- Because of easing measures and lack of data on restructured loans and collateral (not available in January 2022), NPLs are very likely underestimated; under-provisioning estimates should be revised when restructured loan data become available.
- BCC amended Instruction 44 in December 2021 with reporting templates to support TA and anticipation of NPL impacts.

### Macrofinancial vulnerabilities and risk transmission (RAM mapping highlights)
- Five key vulnerabilities reiterated:
  1. Weak banking system capital base.
  2. Difficulty appraising NPLs after COVID-19 measures.
  3. Financial dollarization risks.
  4. Breakdown of CBRs owing to de-risking.
  5. Subsidiaries centralizing liquid assets with parents abroad.
- External shocks (drop in commodity prices, de-risking, ringfencing at parent companies): probability High/High/Medium; impacts include NPLs on CAR, liquidity gaps, interconnection effects.
- Domestic shocks (depreciation, concentration, failure of large exposure, operational risks): probabilities Medium to Low; transmission through net open position, NPLs in FX on CAR, failure of large exposures on CAR, loss of interbank exposure on CAR, operational losses on P&L.

### Placements abroad and correspondent relationships
- Banks hold substantial surplus funds placed with foreign correspondents, parent companies, or local competitors; interbank market is nascent.
- Large and growing interbank placements abroad yield less than interest on loans and are increasingly difficult due to “de-risking.”
- Correspondent relationships split into:
  - ordinary correspondent banks (large banks in advanced countries);
  - parent companies centralizing group cash flow (risk of parent default while holding a large part of Congolese domestic savings).
- Available data do not distinguish between these two types of foreign investments.

### Stress testing — diagnostics, data gaps, and illustrative scenarios
- Mission did not perform comprehensive stress test; worked selectively on available data.
- Data gaps preventing robust stress testing:
  - up-to-date data on restructured receivables per amended Instruction 44 (December 2021);
  - collateral;
  - liquidity by maturity and by counterparty type (ordinary correspondent banks or parent companies);
  - interbank exposures.
- Illustrative sectoral stress-test assumptions used by mission:
  - Performing loans becoming NPLs in risk sectors: 25 percent.
  - Performing loans becoming NPLs in other sectors: 10 percent.
- Results inconclusive due to caveats on NPL level and data limitations.
- Preconditions for stress-testing TA:
  - identify stress-testing committee/unit to receive training through TA;
  - prepare data tables and queries for stress tests after COVID-19 measures are lifted.

### Technical assistance (TA) assessment and priorities
- Review of TA 2016–2021: overall positive; TA contributed to 2019 regulatory reforms and foundations for risk-based supervision.
- Of 136 recommendations within FSSR scope (2016–2021):
  - 27 not implemented; 18 of these related to transition to IFRS (project suspended).
  - Excluding IFRS project, implementation rate above 50 percent over 2018–2019 pre-COVID-19 period.
- Going forward: prioritize TA programs given large number of reforms; focus on staff strengthening, recruitment of specialized skills, IT tools, and additional budget to absorb TA.

### Selected high-priority recommendations (extracted from Table 1)
- Relaunch competitive recruitment of banking experts to support reform agenda (Priority: H; Time Horizon: ST) (¶25).
- Check reliability of NPL reporting after lifting of regulatory easing measures and check impact of expected credit losses on capital (Priority: H; Time Horizon: IM) (¶28–29).
- Confirm operational rollout of risk-based supervision by strengthening qualitative reporting, integrating rating into supervision, upgrading early warning indicators and early intervention, updating guidance manuals (Priority: H; Time Horizon: ST) (¶26–27).
- Draft instruction on transactions with related parties (Priority: M; Time Horizon: MT) (¶31).
- Implement Basel III in respect of liquidity risk (Priority: M; Time Horizon: LT) (¶35).
- Require banks to prepare preventive recovery plans as soon as new banking law is adopted and adopt Instruction specifying elements to be included (Priority: H; Time Horizon: ST) (¶42).
- Require banks to include loss of one or more CBRs in recovery scenarios (Priority: H; Time Horizon: ST) (¶40).
- Identify stress-testing committee/unit to receive TA training (Priority: H; Time Horizon: IM) (¶52).
- Prepare data tables and queries for stress tests after COVID-19 measures are lifted (Priority: H; Time Horizon: IM) (¶55).
- Launch work of the Financial Stability Committee (FSC) and create an autonomous structure at the BCC dedicated to financial stability (Priority: H; Time Horizon: IM and ST respectively) (¶61–62).
- Develop granular reporting and launch reform of the credit register (Priority: H; Time Horizon: MT) (¶59).
- Prepare contingency plan for BCC in event that banks’ relations with foreign correspondents decline with systemic impact (Priority: H; Time Horizon: MT) (¶70).
- Analyze BCC-held information on board composition and incorporate into supervision; mainstream gender in consumer protection supervision; use TA to support GDD review and implementation (Priorities: M; Time Horizons: ST/MT/LT) (¶78–80).

### Implementation, capacity constraints, and sequencing
- Two most urgent issues:
  - data collection and quality;
  - building additional resources (IT, human resources, staff capacity, and budget).
- DSIF staffing freeze since 2017; need to revive competitive recruitment and upgrade skills.
- Suspension of onsite inspections since March 2020 (except one problem bank) reduced supervisory coverage; urgent need to resume onsite audits when feasible.
- Proposed gradual and prioritized approach to recovery and resolution tools, sequencing by capacity and legal framework readiness.
- Conflicts of interest from BCC performing supervision, resolution, and ELA: recommend operational separation and safeguards if functions remain within single authority.

### Nonbank sector, financial inclusion, and gender mainstreaming
- Microfinance and e-money:
  - Microfinance institutions reduced from 149 in 2012 to 92 currently; market share shrunk from 4.7 percent in 2017 to 2.7 percent in 2020.
  - Microfinance interest rates reported between 24 percent and 48 percent per year; banks between 18 percent and 15 percent.
  - EMIs: four licensed EMIs; active customers 8.9 million at end-2020, up from 1.7 million in 2015.
  - EMIs must deposit customer funds in dedicated bank accounts with a 25 percent cap on their deposits in the same bank; BCC plans to make 25 percent cap a regulatory requirement once banking law passed.
- Gender-disaggregated data (GDD) and supervisory mainstreaming:
  - BCC previously reported up to 4 of the 15 FAS GDD datasets through 2018; internal review of GDD under way.
  - Short-term recommendations: define BCC internal gender policies; analyze existing information on composition of boards and management and incorporate into supervision; mainstream gender in consumer protection supervision; complete internal review of GDD collection and resume reporting to the Financial Access Survey (FAS).
  - TA recommended (Toronto Centre, possibly with STA) to mainstream gender-aware supervision and support GDD review and reporting.

### Project-specific notes and status updates
- Credit register outsourcing project launched in 2016 with German cooperation unsuccessful; IFC hired a consultant to conduct diagnostic study; KfW budget €3.6 million to support establishment of credit register.
- Many prior recommendations tracked with specified deadlines and status labels (e.g., ONG, FA, PA, NA); notable implemented items include publication and amendment of Instruction 44 in December 2021 and introduction of draft banking law in December 2021.

### Technical Assistance Roadmap (TARM) — emerging topic F: mainstreaming gender in financial supervision (Annex 1 items)
- F.1–F.6 outline staged TA priorities for gender-aware supervision, all with Authority in Charge: BCC, Priority: MH, and Time Horizons: ST/MT/LT per item.
  - F.1 (ST): Gender equality at the BCC: plan, policies, and commitments on supervision.
  - F.2 (ST): Use existing data on FSP boards to address gender balance in management.
  - F.3 (MT): Support development of gender-aware consumer protection supervision.
  - F.4 (MT): Follow-up of Year 1 topics.
  - F.5 (LT): Improve collection of GDD — priorities for supervision and financial inclusion (possible STA partnership).
  - F.6 (LT): Follow-up of Years 1 and 2 topics.

*Source: IMF staff report excerpts — 1codea2022004 (FSSR mission material and annexes).*

### Preface____________________________________________________________________4

### 1codea2022004 - Preface____________________________________________________________________4

### Preface: mission, scope, and participants
- An FSSR mission (virtual mode) was conducted during January 5–28, 2022 by the IMF Monetary and Capital Markets Department (MCM).
- Mission led by David Blache (MCM) and supported by Ivan Guerra (MCM), and external experts Amel Ben Rahal, Olivier Frécaut, François Gomez, Jennifer Long and Anatol Monid.
- The Fund’s Statistics Department (STA) conducted a financial soundness indicators (FSI) assessment in February 2022. The World Bank conducted an FSAP development module mission in February 2022.
- A scoping mission in August 2021 agreed the FSSR coverage: (i) financial sector regulation and supervision; (ii) crisis management and the financial safety net; (iii) bank stress tests; (iv) the financial stability mandate and macroprudential policies; (v) financial stability implications of financial sector deepening and financial inclusion; and (vi) gender mainstreaming in financial supervision.
- The mission presented main observations and recommendations at a closing meeting on February 4 chaired by Dieudonné Firiki Alimasi, First Vice-Governor of the BCC, and attended by BCC directors and IMF/AFRITAC/World Bank representatives listed in the source.
- The mission thanks BCC staff and highlights support from Jean-Marcel Kalubi (DSIF) and Deputy Director Daniel Kavula.

### Summary: key macrofinancial vulnerabilities and diagnostic findings
- Five macrofinancial vulnerabilities were identified:
  - (i) weakness of the banking system’s capital;
  - (ii) difficulty in evaluating nonperforming loans (NPLs) following the COVID-19 measures;
  - (iii) risks related to financial dollarization;
  - (iv) breakdown of correspondent banking relationships (CBRs) because of “de-risking”;
  - (v) bank subsidiaries in the DRC holding surplus funds with parent companies abroad.
- Bank stress-testing: insufficient data prevented definitive conclusions, largely due to lack of transparency in credit restructurings under 2020 regulatory easing measures.
- The BCC adopted exit measures in December 2021 with specific reporting requirements; this creates near-term TA needs to anticipate NPL impacts that are likely underestimated.
- Preconditions for effective stress-testing TA:
  - (i) identify a stress-testing committee or unit to receive training through TA;
  - (ii) prepare data tables and queries for stress tests after COVID-19 measures are lifted.

### Financial regulation and supervision: diagnostic and action priorities
- DSIF has the basic tools for risk-based supervision in line with 2014 FSAP recommendations; remaining actions include:
  - fully integrating the rating system into bank supervision to confirm operational rollout of risk-based supervision;
  - upgrading early warning indicators and early intervention processes;
  - rapidly evaluating NPLs once 2020 regulatory easing measures are lifted (following regulation adopted December 2021);
  - conducting onsite audits as soon as health conditions permit;
  - revising banking regulations to align with the new banking law once adopted;
  - drafting an instruction consolidating rules on transactions with related parties;
  - continuing actions on operational risk, IT risk and cyber risk;
  - implementing Basel III in respect of liquidity risk in the longer term;
  - establishing prudential regulations for payment institutions.

### Crisis management and financial safety net: diagnostic and action priorities
- Key areas needing attention:
  - sequential and proportionate implementation of the new framework for banking crisis prevention and resolution;
  - managing BCC’s conflicts of interest through functional separation;
  - integrating a loss-of-CBRs scenario into recovery planning;
  - updating cross-border cooperation agreements to integrate recovery and resolution planning;
  - ensuring resolution tools are supported by a resolution funding mechanism;
  - modernizing emergency liquidity assistance (ELA) by the central bank;
  - establishing a credible and viable deposit insurance system subject to preconditions.

### Financial stability mandate and macroprudential policies
- Legislative shortcomings to be addressed by the draft banking law.
- The BCC’s financial stability function and macroprudential policies need to be constructed.
- Essential data and systems requirements:
  - reporting of FSIs for the first time;
  - overhaul of the credit register (centrale des risques);
  - design of dashboards and granular reporting;
  - creation of a new autonomous Financial Stability Department equipped with information systems, budget, and human resource profiles for analytical activities.

### Other sectors and gender mainstreaming
- Microfinance and e-money: no financial stability risks identified at this stage, but continued strengthening of supervision is recommended.
- Contingency planning: prepare a contingency plan for the BCC in case of systemic decline in banks’ relations with foreign correspondents.
- Gender-disaggregated data (GDD) and supervisory mainstreaming—recommendations requiring limited BCC resources:
  - define the BCC’s internal gender policies;
  - analyze existing information on composition of boards and management bodies and incorporate into supervision;
  - mainstream gender in consumer protection supervision;
  - complete internal review of GDD collection and resume reporting to the Financial Access Survey (FAS).

### Implementation, capacity constraints, and priorities
- Two most urgent issues:
  - data collection and quality;
  - building additional resources (information technology, human resources, capacity of staff, and budget).
- Data quality and availability underpin recommendations across banking supervision, crisis management, financial stability, stress testing, and GDD.
- BCC has responded relatively well to previous TA but absorption capacity constrained by limited human resources and pandemic disruption since 2019.
- DSIF has received wide-ranging TA but lacks resources to fully implement recommendations and to absorb new ones.
- Additional resources will be needed to address reform needs and to strengthen banking supervision and establish financial stability and resolution functions.

### Selected high-priority recommendations (extracted from Table 1)
- Relaunch a competitive recruitment of banking experts, as in 2014 and 2017, to support the banking and financial reform agenda (Priority: H; Time Horizon: ST) (¶25).
- Check the reliability of NPL reporting following lifting of regulatory easing measures and check impact of expected credit losses on capital (Priority: H; Time Horizon: IM) (¶28–29).
- Confirm operational rollout of risk-based supervision by:
  - strengthening qualitative reporting required of banks;
  - integrating rating into supervision and prudential evaluation;
  - upgrading early warning indicators and early intervention;
  - updating guidance manuals for onsite supervision (Priority: H; Time Horizon: ST) (¶26–27).
- Draft instruction on transactions with related parties (Priority: M; Time Horizon: MT) (¶31).
- Implement Basel III in respect of liquidity risk (Priority: M; Time Horizon: LT) (¶35).
- Require banks to prepare preventive recovery plans as soon as new banking law is adopted and adopt the Instruction specifying elements to be included in such plans (Priority: H; Time Horizon: ST) (¶42).
- Require banks to include in recovery scenarios the loss of one or more correspondent banking relations (Priority: H; Time Horizon: ST) (¶40).
- Identify a stress-testing committee or unit to receive training through TA (Priority: H; Time Horizon: IM) (¶52).
- Prepare data tables and queries for stress tests after COVID-19 measures are lifted (Priority: H; Time Horizon: IM) (¶55).
- Launch work of the Financial Stability Committee (FSC) and create an autonomous structure at the BCC dedicated to financial stability (Priority: H; Time Horizon: IM and ST respectively) (¶61–62).
- Develop adequate granular reporting and launch reform of the credit register (Priority: H; Time Horizon: MT) (¶59).
- Prepare a contingency plan for the BCC in the event that banks’ relations with foreign correspondents decline with systemic impact (Priority: H; Time Horizon: MT) (¶70).
- Analyze BCC-held information on board composition and incorporate into supervision; mainstream gender in consumer protection supervision; use TA to support GDD review and implementation (Priorities: M; Time Horizons: ST/MT/LT) (¶78–80).

### Financial system context and key statistics
- Total financial assets represent 24.7 percent of GDP (2021).
- Bank assets make up 97 percent of the financial system.
- Bank types: local (4), pan-African (9), international (2).
- Two banks hold 55 percent of the banking system’s assets.
- About 90 percent of loans are located in two of the 26 provinces, Kinshasa and Haut-Katanga.

*Preface and Summary drawn from the FSSR mission material (January 5–28, 2022) and associated sections as provided.*

### 6. The banking sector provides very little financing to the economy. The DRC is

### 6. The banking sector provides very little financing to the economy. The DRC is

### Credit penetration and portfolio composition
- Credit/GDP ratio: about 7.5 percent at end-2020 (world average: 147.6 percent).
- Foreign currency loans have accounted for an average of 89.2 percent of the portfolio of lending to the economy over the past five years.
- Sectoral distribution of credit: “Other” (primarily households) 25 percent; “Mining” 24 percent of total credit.
- Due to weak lending activity, banks hold substantial surplus funds which they place with foreign correspondents, parent companies, or local competitors; the interbank market is nascent with few active participants.

### Deposits, dollarization, and funding structure
- Total deposits growth: from US$5.63 billion in March 2020 to US$10.33 billion in September 2021.
- Deposit composition: current accounts represent 62 percent of deposits.
- Foreign currency deposits: about 85 percent of total deposits in September 2021.
- Change in Mining Code surrender requirements: raised from 40 percent to 60 percent, contributing to deposit growth.
- Most large dollar transactions are conducted through correspondent banks abroad due to lack of a local foreign-currency payment system (local US dollar clearing system suspended by the BCC in 2020).

### Profitability and cost structure
- Interest margins: over 10 percent.
- Aggregate net earnings: negative in 2020 (attributed to provisioning for a systemically important bank); profitability expected to improve significantly in 2021 given rise in commodity prices.
- Operating costs and charges: high operating costs; taxes, parafiscal charges, and annual supervisory fees at 0.6 percent of total deposits.

### Capital adequacy and capitalization needs
- Aggregate capital adequacy ratio: 14 percent in 2020; fell to 12.1 percent as of end-September 2021.
- Solvency ratio remained above 20 percent until mid-2017 but has fallen dramatically due to growth of risk-weighted assets while regulatory capital remained essentially unchanged.
- Number of undercapitalized banks (basic solvency requirement 10 percent): three banks as of report; one undergoing transformation into a microfinance institution; corrective actions underway at the other two.
- Undercapitalized at 12.5 percent requirement (basic solvency ratio + capital conservation buffer of 2.5 percent as of end-2021): four more banks.
- Eight out of 15 banks have satisfied the current minimum capital requirement of US$30 million.
- Results of solvency evaluation (not considering restructured/rescheduled claims or collateral): systemwide capital adequacy falls to 11 percent.
  - Two more banks become undercapitalized under a CAR of 10 percent (total five undercapitalized banks).
  - Two additional banks become undercapitalized under a CAR of 12.5 percent (total seven undercapitalized banks).
  - Recapitalization needs at end-2021:
    - US$25.5 million at a 10 percent requirement; and
    - US$149 million at a 12.5 percent requirement.

### Nonperforming loans and provisioning
- Nonperforming loans (NPLs): 8.5 percent of total loans.
- System provisioning: 69.2 percent of NPLs (loan loss reserves as percent of NPLs).
- BCC Instruction 16 provisioning rates (percentage by claims classification):
  - Sound: 1
  - On watch: 3
  - Pre-doubtful: 20
  - Doubtful: 50
  - Compromised: 100
- COVID-19 regulatory easing (Instruction 44, March 2020) included:
  - Freezing of loan-classification rules during the crisis and allowance for unlimited credit restructuring.
  - Suspension of late payment penalties on overdue claims during the crisis.
  - Incentives for customers to apply for restructuring of delinquent loans based on evolving ability to repay.
  - Granting of grace periods on loan repayments.
- Because of the easing measures and lack of data on restructured loans (not available in January 2022) and collateral, NPLs are very likely underestimated; under-provisioning estimates should be revised when restructured loan data become available.
- BCC adopted exit measures in December 2021 (amended Instruction 44) with specific reporting requirements to support further technical assistance and anticipation of NPL impacts.

### Macrofinancial vulnerabilities and risk transmission
- Five key macrofinancial vulnerabilities identified:
  1. Weakness of the banking system’s capital base.
  2. Difficulty in appraising NPLs following COVID-19 measures.
  3. Risks related to financial dollarization.
  4. Breakdown of correspondent banking relationships (CBRs) owing to de-risking.
  5. Tendency of subsidiaries in the DRC to centralize liquid assets with parent companies abroad.
- Additional systemic weaknesses: insufficient data quality, poor governance and risk management in the banking sector.
- Sovereign-bank nexus: limited—only 4 percent of total bank loans are loans to the central government.
- Risk Assessment Matrix (RAM) mapping (selected transmission channels and impacts):
  - External shocks: drop in commodity prices, “de-risking,” “ringfencing” at parent companies — probability: High/High/Medium; expected impacts include NPLs of affected sectors on CAR, liquidity gaps, interconnection effects.
  - Domestic shocks: depreciation, concentration, failure of large exposure, operational risks — probabilities from Medium to Low; transmission through net open position, NPLs in FX on CAR, failure of large exposures on CAR, loss of interbank exposure on CAR, operational losses on P&L.

### Stress testing and illustrative scenarios
- Sectoral stress test (illustrative, possibly linked to pandemic progression):
  - Performing loans becoming NPLs in risk sectors: 25 percent.
  - Performing loans becoming NPLs in other sectors: 10 percent.
  - Results inconclusive due to caveats on NPL level and data limitations.

### Placements abroad and correspondent relationships
- Large and growing interbank placements abroad yield less than interests on loans and are increasingly difficult due to “de-risking.”
- Banks’ investments and loans largely in US dollars.
- Correspondent bank relationships fall into two categories with different risk profiles:
  - Ordinary correspondent banks (large banks in advanced countries).
  - Parent companies centralizing group cash flow (risk of parent default while holding a large part of Congolese domestic savings).
- Available data do not distinguish between these two types of foreign investments.
- Mission identified tendency for subsidiaries to centralize liquid assets with parent companies abroad.

### Technical assistance (TA) assessment and priorities
- Review of TA provided to the BCC between 2016 and 2021: overall positive conclusion.
- TA contributed to 2019 regulatory reforms and laying foundations for risk-based bank supervision (multi-year support from AFRITAC Central).
- Of 136 recommendations issued following TA during 2016–2021 within the FSSR scope:
  - 27 were not implemented; 18 of these related to transition to IFRS (project suspended).
  - Excluding IFRS project, overall recommendations implementation rate above 50 percent over the 2018–2019 pre-COVID-19 period.
- Going forward: essential to prioritize TA programs given the large number of planned reforms and new missions; prioritize staff strengthening, recruitment of specialized skills, information technology tools, and additional budget to absorb TA effectively.
- The TARM proposals were guided by the need to prioritize actions in the context of limited resources.

### Key recommendations and near-term actions (implied by findings)
- Implement exit and reporting measures (amended Instruction 44) fully and collect detailed data on restructured loans and collateral to reassess NPLs and provisioning needs.
- Address capitalization gaps: plan recapitalization to meet CAR requirements (estimated needs: US$25.5 million at 10 percent CAR; US$149 million at 12.5 percent CAR).
- Strengthen macroprudential oversight, early warning indicators, and crisis prevention tools given limited lender-of-last-resort capacity due to dollarization.
- Develop and implement a resolution mechanism and enhance bank supervision to anticipate crises and enable early action.
- Prioritize technical assistance delivery, staffing, specialized skill recruitment, and IT/budgetary resources to support supervisory reforms and banking-sector stability.

*Source: IMF staff report (excerpts) — chapter: The banking sector provides very little financing to the economy.*

### 25. This regulatory and operational improvement was achieved in the context of a

### 1codea2022004 - 25. This regulatory and operational improvement was achieved in the context of a

### Staffing, capacity, and operational constraints
- Staffing freeze since 2017 despite an increasing number of assignments to the DSIF.
- Workforce strengthened in 2014 and in 2017 by the arrival of about 30 young employees who benefited from several AFC training courses, including for IT specialists oriented toward new IT risks and cyber risks.
- No competitive recruitment at the DSIF since 2017; recruitment needs to be revived to fulfill the regulatory agenda set by the TARM.
- Lockdown periods since 2020 greatly reduced activity due to lack of access to a fluid internet and absence of onsite audit practice for two years, creating a likely need for a skills upgrade.
- Recommendation: revive recruitment and provide skills upgrading, including TA for onsite audit practice.

### Implementation of risk-based supervision (SYSNOB, SREP, Pillar 2)
- The BCC now has basic tools to implement genuine risk-based supervision consistent with the 2014 FSAP recommendations.
- A bank rating system (SYSNOB), inspired by international best practices, was tested on all banks in summer of 2021.
- Operational priorities:
  - Move toward full integration of SYSNOB in the permanent control process.
  - Ensure ratings inform BCC actions in defining prudential supervision measures, with appropriate modalities and intensity.
  - Integrate ratings into the Supervisory Review and Evaluation Process (SREP) in the context of upcoming implementation of Pillar 2.
  - Regularly adapt the SYSNOB tool to evolving risks.
- Possible next steps: study creation of a specific criterion for risk concentration (by beneficiary and sector) and provide TA to update guidance manuals for onsite supervisors.

### Reporting, ICAAP/ILAAP, and stress-testing
- DSIF needs to enhance qualitative reporting on risk management.
- Drafting of the template for the annual report on internal control and risk management (to be sent by banks to the BCC) will:
  - Provide supervisors with information to answer questionnaires on application of prudential regulations and standards and good risk management and control practices.
  - Reveal the regulator’s expectations and enable banks to progress in ICAAP/ILAAP, formalize risk appetite, and assess capital adequacy relative to risk exposure.
- Current gap: DSIF has not yet incorporated stress-testing as a tool of risk-based supervision.
- Recommendation: implement stress-testing and finalize the annual internal control/risk management reporting template.

### NPLs and the lifting of COVID-19 measures
- Identification of NPLs is weakened and has become more pronounced since regulatory easing measures of 2020.
- Loans in the DRC are classified at five levels according to refunding capacities and days in default.
- Provisioning example: sound receivables, after deducting collateral, must be provisioned at a flat rate of 1 percent.
- AFC TA mission scheduled for Q1 2022 to align reference Instruction 16 with IFRS 9.
- Instruction 44 of March 2020 allowed banks to restructure loans without restructuring affecting classification; amendment in December 2021 limits restructurings to two in the future.
- Recommendation: as soon as public health conditions allow, perform onsite inspections to:
  - Check use of restructuring option.
  - Verify banks’ application of classification criteria and impact of expected credit losses on capital.
  - Urgent TA to DSIF to assist in preparation and follow-up of missions (constitution of loan-tapes, selection of loans for audit, analytical guide, formalism of repayments).

### Consistency of legislative and regulatory frameworks; related-party transactions
- Prudential regulations must be reviewed to align with the future banking law, which will specify obligations on licensing, authorization, governance, internal control, and risk management.
- BCC instructions on these subjects will need review to ensure compliance with the new legislative framework; priority: strengthen licensing and governance requirements.
- Transactions with related parties are addressed in multiple regulatory texts; fragmentation hampers sound management.
- Recommendation: consolidate rules applicable to bank transactions with related parties into a single instruction, including criteria in point 20 of the Basel Core Principles for Effective Banking Supervision (BCPs).

### Other prudential standards, capital, and buffers
- Quantitative prudential standards on solvency were redefined in 2019 to converge with Basel standards.
- Solvency ratio:
  - Minimum set at 10 percent.
  - Banks are not allowed to use internal models.
  - Market and operational risk requirements in denominator are multiplied by 10 (not by 12.5).
- Three types of capital buffers required: capital conservation, countercyclical, and for systemic institutions.
  - As of end-2021, only the 2.5 percent capital conservation buffer had been activated.
  - Activation of the countercyclical and systemic buffers was postponed because of the pandemic.
  - BCC decided four institutions are systemically important and should have a buffer of between 1 percent and 2 percent.
- Minimum leverage ratio set at 5 percent.
- Minimum capital requirement changes:
  - Will increase from US$30 million to US$50 million.
  - Postponed to January 1, 2025 (originally January 1, 2022) with staged increments: US$5 million on January 1, 2023; US$5 million on January 1, 2024; and US$10 million on January 1, 2025.
  - As of end-September 2021, four banks had own funds of more than US$50 million, but seven had not yet attained US$30 million.
- Guidance when raising minimum capital: staggered phase for small profitable banks, same amount apply to larger banks (case in DRC), need for credible bank resolution framework, minimum capital not a substitute for effective supervision and solvency requirements.
- Undercapitalized banks should provide credible capital restoration plans.

### Financial dollarization, reserve requirements, and liquidity ratios
- Prudential rules account for financial dollarization:
  - Banks can record certain elements of their capital in US dollars to neutralize exchange rate effect.
  - From 2022 onward, reserve requirements on foreign currency deposits will be constituted in dollars.
  - For commonly used currencies (e.g., US dollar), foreign exchange position limit is 10 percent of banks’ long or short foreign exchange positions relative to equity.
  - Liquidity ratio must be calculated in three ways, including an exclusively foreign currency calculation.
  - Foreign exchange risk is monitored under each bank’s qualitative risk management and by the board of directors.
  - New US dollar-indexed bills issued by the treasury since 2021 are treated as foreign currency exposure for credit risk with a prudential weighting of 100 percent for the DRC.
- Credit risk transmission: banks encouraging households to take debt in foreign currency for loans of more than 12 months while households’ resources are mainly in CDF; Labor Code limits monthly loan payments to not exceed 30 percent of income.
- Recommendation: once macroprudential powers are fully in place, assess whether additional measures, such as additional capital buffers, are needed.
- Liquidity ratio move toward Basel III-type ratios:
  - Current ratio compares realizable assets and current liabilities over the ensuing 30 days; not forward-looking.
  - Absence of financial markets and absence of HQLA in the DRC imply implementation must be prepared via impact studies with a multi-year adaptation period.

### IT risk and cyber risk
- Credit institutions, including EMIs, are required to report cyberattacks to the BCC; to date, there have been no reports.
- Some banks increased digital services since COVID-19; frauds remain “classic” frauds on bank cards.
- BCC strengthened prudential requirements on IT risk as part of operational risk and defined best practices and requirements for business continuity planning.
- A methodological guide covering IT risk issues for onsite audit was drafted with AFC; training to present this guide to DSIF supervisors was postponed to February 2022 due to the pandemic.
- Recommendation: update the guide and publish guidelines specifying regulator’s expectations for operational risk and IT risk management after first onsite audits using the guide.

### Nonbank sector — Payment institutions
- Law of July 09, 2018 relating to payment and securities settlement systems drafted with WB support does not cover categories of payment services providers and their prudential rules.
- Creation of a payment institution category (encompassing EMIs and “financial messaging” companies) is under discussion.
- Regardless of outcome (integration with credit institutions or specific payment institution category), specific prudential regulations will be needed.
- Recommendation: schedule TA once the banking law is promulgated and AFC-requested roadmap is drafted; organize a training workshop.

### Crisis management and financial safety net — overview and sequencing
- Identified areas requiring attention: sequential and proportionate implementation of new prevention and resolution framework, management of conflicts of interest at the BCC through separation of functions, CBRs, role of foreign interests, resolution funding, ELA by the central bank, and deposit insurance.
- Current legislative framework insufficient to cope with banking crises; bank liquidations often opaque and lengthy.
  - BCC website lists 15 banks struck off or closed without dates or circumstances.
  - Five liquidations still in progress, the first started in 1998.
  - Shareholders retain rights after provisional administrator appointment; shareholder opposition has derailed resolution processes.
  - Recent liquidations have not resulted in public disclosure of results and compensation details.
- Draft banking law will improve several points but implementation requires new regulatory instructions and operating procedures and significant human resources and expertise.

### Recommended gradual and prioritized implementation of recovery and resolution tools
- Recommendation: gradual and realistic approach, taking available capacity into account.
  - As soon as law is adopted, banks should prepare preventive recovery plans following BCC instructions.
  - Rely on annual assessment exercises to develop banking resolution tools, prioritizing those adapted to the DRC banking system development level.
  - Priority: operationalization of transfer and liquidation powers.

### Managing conflicts of interest — separation of functions
- Creation of a resolution function in a central bank raises conflicts of interest concerns.
- Key Attributes (KAs) emphasize operational independence of resolution authority and governance arrangements to address conflicts.
- When a single authority (BCC) performs supervision, resolution, and ELA, functions must be operationally separate with safeguards; BCC currently does not have separate reporting lines for these three functions.
- Recommendation: balance costs of creating a new unit against governance benefits; consider building capacity within an existing unit in low-capacity environments.

### Recovery planning and correspondent banking relationships (CBRs)
- Fragility of CBRs poses a systemic threat; loss of CBRs could shrink an already narrow number and disrupt international trade.
- United States Treasury noted in 2019 that BCC charter improved compliance but loss of two of three CBRs occurred; currently Citigroup is the only one.
- GABAC published an evaluation report on the DRC in April 2021 highlighting high risks not mitigated in the banking sector.
- Recommendation: include the scenario of loss of CBRs in bank recovery plans given systemic importance; FSSR does not have AML/CFT mandate but systemic nature justifies inclusion.

### Cross-border cooperation, foreign ownership, and contagion risks
- Banking sector heavily dependent on foreign capital: 12 of the 15 banks are owned by foreign legal entities, 9 of which are banking groups supervised by their home-country prudential authorities with varying degrees of cooperation with the BCC.
- Most subsidiaries integrated into group systems; cash management is usually centralized and parents bill DRC subsidiaries for services.
- Crisis risks:
  - Contagion from parent company.
  - Parental reluctance to provide support to troubled DRC subsidiaries.
- Recommendation: BCC should review cross-border cooperation agreements, consider liquidity stress scenarios in recovery plans, and clarify articulation between group-level and DRC subsidiary recovery and resolution plans; provide TA on international standards and best practices.

### Resolution funding mechanism and ELA
- Resolution tools need a resolution funding mechanism because failed banks will have eroded capital and liquidity.
- Use of budgetary funds should be last resort, subject to strict conditions including full recognition and absorption of losses by failing bank’s shareholders.
- Of the three KA-proposed resolution financing mechanisms (KA 6.3):
  - (i) deposit guarantee mechanism financed by the banking industry;
  - (ii) special resolution fund;
  - (iii) public temporary financing recovered ex post from the financial industry.
- In the DRC context: first mechanism does not exist, second is disproportionate, third seems most proportionate but probably requires legislative action.
- Central bank’s role: limited to temporary provision of liquidity in specific and well-defined cases; it is never the central bank’s job to finance resolution measures.

*Source: Excerpt from 1codea2022004.*

### 50. The current situation in the DRC is paradoxical in terms of ELA and liquidity in

### 1codea2022004 - 50. The current situation in the DRC is paradoxical in terms of ELA and liquidity in

### Emergency Liquidity Assistance (ELA) and liquidity in resolution
- Article 20 of the 2018 Central Bank Charter authorizes the BCC to extend “special credits” to banks facing insolvency on behalf of the State, with an explicit guarantee by the State to the BCC when the latter provides solvency support to a bank, but these credits do not have an ELA role.
- There is no formal framework based on international best practices for the BCC to grant ELA.
- Recommendation: Prepare an ELA framework with particular attention to:
  - guarantees in the central bank’s favor;
  - the availability of foreign currency liquidity in a highly dollarized system;
  - cooperation with home-country authorities.

### Deposit insurance
- Establishment of a credible and viable deposit insurance system is a strategic objective for the BCC but should be subject to preconditions.
- The mission considers that the necessary preconditions for the success of a deposit insurance system, which are more complex due to dollarization, have not yet been met (notably, effective prudential regulation, supervision, and bank resolution; strong legal and judicial frameworks and accounting and disclosure systems).
- Suggestions for reform across the report will contribute indirectly to preparing for the establishment of a deposit insurance system.
- Recommendation: Assess progress toward establishing deposit insurance in the long term, taking into account the additional difficulty of extreme dollarization.

### Bank stress tests — diagnostics, data gaps, and capacity
- Prior recommendation (FSAP 2014, MCM): need for “A specialized unit, responsible for enhancing supervision data, its analysis, and performing stress tests (...) is urgently needed.”
- Mission emphasized importance of stress-testing in organizing the future financial stability function and need for additional cross-cutting staff from offsite, onsite, statistics and research units at the BCC.
- Prior to future TA, a stress-testing committee or unit should be identified for TA training.
- The mission did not perform a comprehensive stress test but worked selectively on available data to inform macrofinancial vulnerabilities diagnostic.
- Identified data gaps to enable stress-testing:
  - Up-to-date data on restructured receivables according to the reporting templates included in the amended Instruction 44 of December 2021.
  - Collateral.
  - Liquidity by maturity.
  - Liquidity by:
    - ordinary correspondent banks; or
    - parent companies.
  - Interbank exposures (interconnection risk).
- Additional issues:
  - Under-provisioning adjustment lacked necessary data on current restructured loans.
  - Stress test submissions lacked reliable data received prior to the mission.
  - New forms and procedures for collecting and extracting information (“queries”) were discussed with DSIF and should be implemented before stress-testing exercises begin.

### Financial stability mandate and macroprudential policies — diagnostics and main recommendations
- Current BCC/DSIF achievements despite limited staffing:
  - Publish financial stability reports since 2015.
  - Prepare the work of the Internal Financial Stability Committee (IFSC) created in 2019.
  - Prepare the compilation of FSIs, via the Financial System Risk Monitoring Division within DSIF.
- Constraints:
  - Staffing levels insufficient to set up a genuine financial stability function.
  - BCC has a statutory mandate for financial stability but lacks an explicit mandate for macroprudential policy and operational capacity.
  - Draft banking law envisages giving the BCC a macroprudential task and dedicated instruments.
  - Implementation of macroprudential policies requires high-quality granular data, information systems, and suitable staff.
- FSIs alignment efforts:
  - BCC worked with STA since 2013 to align FSI compilation with international standards.
  - Planned first regular transmission of FSIs for publication starting in May 2020 was postponed due to difficulties extracting primary data from the BCC database and delays in data transmission by banks.
  - BCC set a goal of finalizing the FSI system in 2022 after validation by an STA mission scheduled for February 2022.
- Credit register:
  - The credit register suffers from shortcomings in reliability, completeness, and relevance.
  - The International Finance Corporation conducted a diagnostic mission in December 2021 to relaunch the project for a credit register that meets standards.
- Main recommendations for macroprudential capacity building:
  1) Start work of the Financial Stability Committee created under the agreement between the Ministry of Finance and the BCC pursuant to Law 2018/027, including:
     - appoint the chair of the FSC Technical Secretariat;
     - publish the order of the Minister of Finance listing financial sector data to be provided to the FSC Technical Secretariat.
  2) Establish a genuine financial stability function within the BCC:
     - First stage: create a dedicated financial stability unit to articulate resource needs (data, human resources profile, software).
     - Second stage: create an enlarged structure receiving contributions from various departments to develop strategy and operational framework for macroprudential policy, divided into five stages:
       i. Selection of relevant indicators for the national context, preparation of dashboards, development of forecasting models, undertaking stress testing-exercises;
       ii. Risk identification and vulnerability assessment using developed tools;
       iii. Selection and calibration of shock prevention and mitigation and crisis management instruments;
       iv. Implementation of these macroprudential instruments;
       v. Evaluation and adjustment of the measures.
- Organizational placement:
  - Consider positioning new Financial Stability Department in one of three options: (i) macroeconomics and monetary policy branch; (ii) within banking supervision function; (iii) as an autonomous function reporting directly to the central bank’s decision-making bodies.
  - Creating an autonomous department would be in line with international best practice (examples cited: Banque de France, Bank El Maghreb, Central Bank of Tunisia).
  - An autonomous department would independently analyze impacts of monetary, microprudential, budgetary, and economic policies on financial stability and likely get more traction with top policy makers.
  - Recommendation: Begin process of creating a new financial stability structure as soon as possible.

### Financial stability implications of financial sector deepening and inclusion
- Focus areas: (i) microfinance; (ii) e-money services; (iii) loss of CBRs.
- Microfinance sector:
  - Restructured under BCC leadership; DFIs reduced from 149 in 2012 to 92 currently.
  - BCC improved regulatory framework, intensified inspections, monitored recovery plans, and ordered closure/liquidation of unviable institutions without disruptions to partner banks.
  - BCC has proposals to consolidate laws on DFIs.
  - COVID-19 hit sector hard; sector weakened by competition from banks offering more attractive interest rates.
  - Interest rate ranges reported:
    - Microfinance: between 24 percent and 48 percent per year.
    - Banks: between 18 percent and 15 percent. [note: order preserved as in source]
  - Increased overall risk primarily from heightened credit risk: PAR 30 rose from 9.5 percent to 11.3 percent between 2019 and 2020.
  - Microfinance did not benefit from relaxation of provisioning rules granted to banks.
  - Microfinance market share shrunk from 4.7 percent in 2017 to 2.7 percent in 2020.
  - Conclusion: MFIs do not pose a financial stability risk; they grant very short-term loans (75 percent to retail commerce, 25 percent to individuals).
  - New interconnections between microfinance, e-money institutions, and credit and insurance services are not systematically monitored and essentially involve agent relations.
- E-money institutions (EMIs):
  - EMIs continue to grow very rapidly; four licensed EMIs are now the second largest segment of the financial sector, ahead of microfinance.
  - All four EMIs are linked to pan-African or global telecom groups and benefit from telecom groups’ experience in operational and cyber risks.
  - Active customers: 8.9 million at end-2020, up from 1.7 million in 2015.
  - EMIs must deposit customer funds in dedicated bank accounts, with a 25 percent cap on their deposits in the same bank.
  - BCC plans to turn the 25 percent cap recommendation into a regulatory requirement once the new banking law is passed.
  - Funds in the account are supposed to be unattachable, but bankers report frequent problems with court rulings applied to unattachable accounts; the banker that fails to enforce them risks criminal sanctions.
- Loss of correspondent banking relationships (CBRs):
  - Recommendation: Public sector should prepare a contingency plan for the loss of CBRs of systemic dimension.
  - Fragility of CBRs identified as a systemic threat to the banking sector.
  - Recommendation: BCC should prepare a contingency plan if banks’ CBRs shrink by an amount that has systemic impact; MCM has issued recommendations and could provide TA.
- Main supervisory recommendation:
  - BCC must continue to strengthen supervision of nonbank financial institutions (microfinance, payment and e-money institutions), which do not currently pose a systemic risk but could constitute emerging risks unless adequately supervised.

### Emerging topic — Mainstreaming gender in financial supervision
- Diagnostics:
  - FSSR applied the Gender-Aware Supervision Toolkit (Toronto Centre).
  - Gender-inclusive supervision benefits prudential risk management and requires collection of gender-disaggregated data (GDD) and a framework to use them.
  - Some supervisory data useful for gender-aware supervision (e.g., gender composition of boards and managers) are not typically collected for financial inclusion statistics.
  - Until recently, BCC reported some GDD to the IMF Financial Access Survey (FAS): up to 2018 it reported 4 of the 15 gender-disaggregated data sets in the FAS.
  - BCC stated an audit of its GDD reporting is under way but did not specify date for resuming reporting to the FAS.
  - BCC plans to expand GDD collected from FSPs in the future, possibly including credit, savings, SMEs, and mobile money, while being cautious about regulatory burden.
  - FSPs interviewed already produce gender breakdown of customer data for their own purposes.
  - BCC already has data on composition of FSP boards which could be used to set expectations for gender balance and as an indicator in risk-based supervision.
  - BCC received TA on ensuring internal policies support gender equality and inclusion; DRC has a constitutional requirement for gender equality.
  - Women are well represented in BCC’s senior management.
  - BCC planned training in 2022 on consumer protection and market conduct supervision; progress could contribute to the financial inclusion strategy expected to be finalized by end-2022.
  - Some FSPs use GDD to tailor products to women customers; others do not despite having required data.
- Main recommendations:
  - Short term: integrate available GDD into BCC’s internal policies and existing supervision activities.
  - Medium to long term: improve consumer protection supervision and expand the set of GDD.
  - Recommendation 1: Use previous TA on gender equality to define BCC’s internal gender equality policies, particularly for moving toward parity in staff policies and senior management.
  - Recommendation 2: Analyze data on board composition already possessed by the BCC and integrate it into existing supervision processes (e.g., introducing this criterion into the rating system); TA to focus on how to analyze and use the data in supervisory assessments.

*Source: 1codea2022004 - 50. The current situation in the DRC is paradoxical in terms of ELA and liquidity in; https://www.imf.org/-/media/files/publications/cr/2022/english/1codea2022004.pdf*

### 79. The third recommendation is to use TA to mainstream gender into the

### 79. The third recommendation is to use TA to mainstream gender into the

### Gender-aware consumer protection supervision (recommendations and implementation)
- Recommendation: Use TA to mainstream gender into the implementation of consumer protection supervision.
- TA scope: Combine work on developing a comprehensive supervision approach, capitalizing on the GDD already available, with areas such as complaints and product design/governance.
- Rationale: Complaints and product design/governance are important to the BCC’s consumer protection mandate and should contribute to financial inclusion.
- Implementation modalities:
  - Based on one physical mission per year to provide TA to the BCC contact point and a small group of core staff, and to allow follow-up on topics covered in previous years.
  - A second mission each year is possible if the BCC requests it and has allocated resources for the development of consumer protection supervision.
  - The proposed TA would require a visible commitment from BCC leadership to gender-aware supervision, communicated by the governor to BCC directors, recognizing resource constraints and other priorities.
  - The BCC should appoint a relatively experienced contact person to work with the TA provider and advocate for the work within the BCC.

### Support for GDD review and reporting
- Final recommendation: Use TA to support the review and implementation of the GDD changes as compiled.
- Expected outcome: Help the BCC complete its internal review of GDD and resume reporting to the FAS.
- Data collection note: Involving STA would be useful to ensure that FAS expertise and requirements are taken into account.

### Proposed TA providers and partnerships
- Potential provider: Toronto Centre, possibly in partnership with STA.
- Toronto Centre approach: Collaborative deployment with an internal coordinator to tailor the toolkit to the authority’s needs.
- STA role: Particularly relevant for data collection and aligning with FAS requirements.

### Technical Assistance Roadmap (TARM) — overview and linkage to TA
- Purpose: The TARM links diagnostics to key policy reforms envisaged and focuses on specific steps the authorities agreed to take within a defined time period (three years).
- Fund role: With assistance from other TA providers where possible, the Fund will work with the authorities to implement the TARM and monitor progress of reforms against expected outcomes.
- Timing: The precise timing of the TA will be specified in the terms of reference.
- Draft TARM submission: Based on findings and recommendations, the mission proposes the draft TARM for each area reviewed in Annex 1; this will be submitted to relevant IMF staff for approval in consultation with the BCC.
- Identification: TA projects are identified in the draft TARM by numbers under each corresponding area (A.1 through F.6).

### TARM: Emerging topic F — Mainstreaming gender in financial supervision (items from Annex 1)
- F.1
  - Vulnerability or Gap Identified: Failure to consider the gender dimension in the contribution to financial stability
  - Strategic Objective: Gender equality at the BCC: plan, policies, and commitments on supervision.
  - Technical Assistance: [Gender-aware toolkit, parts A1, A2, A3, assisted by previous TA]
  - Authority in Charge: BCC
  - Priority: MH
  - Time Horizon: ST
- F.2
  - Vulnerability or Gap Identified: Failure to consider the gender dimension in the contribution to financial stability
  - Strategic Objective: Use existing data on members of the boards of financial service providers (FSPs) to address gender balance in FSP management.
  - Technical Assistance: [Gender-aware toolkit, parts A1, A2, A3, B2]
  - Authority in Charge: BCC
  - Priority: MH
  - Time Horizon: ST
- F.3
  - Vulnerability or Gap Identified: Failure to consider the gender dimension in the contribution to financial stability
  - Strategic Objective: Support for the development of gender-aware consumer protection supervision.
  - Technical Assistance: [Gender-aware toolkit, parts: A2, B2]
  - Authority in Charge: BCC
  - Priority: MH
  - Time Horizon: MT
- F.4
  - Vulnerability or Gap Identified: Failure to consider the gender dimension in the contribution to financial stability
  - Strategic Objective: Follow-up of topics covered in Year 1.
  - Authority in Charge: BCC
  - Priority: MH
  - Time Horizon: MT
- F.5
  - Vulnerability or Gap Identified: Failure to consider the gender dimension in the contribution to financial stability
  - Strategic Objective: Improvement of the collection of gender-disaggregated data GDD - priorities for supervision and financial inclusion
  - Technical Assistance: [Gender-aware toolkit, parts A2, B2 and A3] (Possibly in partnership with STA)
  - Authority in Charge: BCC
  - Priority: MH
  - Time Horizon: LT
- F.6
  - Vulnerability or Gap Identified: Failure to consider the gender dimension in the contribution to financial stability
  - Strategic Objective: Follow-up of topics covered in Years 1 and 2.
  - Authority in Charge: BCC
  - Priority: MH
  - Time Horizon: LT

*Content based on the provided IMF mission text and Annex 1 technical assistance roadmap.*

### 2013. A project to outsource the CERI,

### 2013. A project to outsource the CERI,

### Project status and financing
- A project to outsource the CERI, launched in 2016 with support from German cooperation, was unsuccessful.
- The BCC approached the International Finance Corporation (IFC) to revive the project.
- KfW returned with a budget of €3.6 million to support the establishment of an efficient and standards-compliant credit register.
- The current situation is that the IFC has hired a consultant to conduct a diagnostic study.
- Status label in the source: ONG

### Legal/institutional recommendation
- Recommendation: Amend the law on commercial courts, adapting it to OHADA.
- Timeframe: Medium-term
- Status note in the source: Not under BCC jurisdiction.

### Institutional Framework for Financial Stability
- No technical assistance on the subject in the last five years.

### Financial Regulation and Supervision — overarching actions (COVID-19 context)
- FY 2021—Virtual (COVID): Discussion about COVID-19-related banking supervision prudential measures; April 2021; 20MMI0205
- Publication of the revised Instruction 44 in December 2021 is part of this process.

### Banking-sector assessment and prudential measures (Recommendations 1–3)
- 1. Make a detailed assessment of the effects of special prudential measures on the banking sector. (§ 36-37 and Annex 3, Part III)
  - Authority in charge: BCC
  - Deadline: Sep 30, 2021
  - Implementation note: Data collection is under way, with the introduction of new statistical statements in the annex to the revised Instruction 44 adopted in December 2021. It is clear that the unlimited restructuring of claims as initially recommended by Instruction 44 in March 2020 was likely to conceal their deterioration.
  - Status: ONG
- 2. Update the assessment of the financial and prudential situation and risks of the banking sector at end-FY 2020. (§ 36-37 and Annex 3, Part III)
  - Authority in charge: BCC
  - Deadline: Sep 30, 2021
  - Status: Idem ONG
- 3. Consult with the competent national and foreign authorities to ensure that the response action calibrated by the BCC in 2021 on the banking sector is consistent with the strategies developed by these authorities. (§ 36-37 and Annex 3, Part III)
  - Authority in charge: BCC
  - Deadline: Sep 30, 2021
  - Implementation note: BCC requested and obtained from IMF AFRITAC Central the organization of a workshop on good practices for dealing with crisis situations such as the COVID-19 pandemic; BCC participated in regional, continental, and international meetings.
  - Status: ONG

### Calibrating and communicating prudential measures (Recommendations 4–11)
- 4. Calibrate special prudential measures by adapting them to the prolongation of the pandemic while anticipating their gradual lifting as the pandemic comes to an end. (§ 36-37 and Annex 3, Part III)
  - Authority in charge: BCC
  - Deadline: Sep 30, 2021
  - Implementation note: See Instruction 44 Amendment 1
  - Status: ONG
- 5. Define strategic priorities for banking supervision in 2021 in a strategic document with an operational action plan, taking into account the pandemic impact. (§ 36-37 and Annex 3, Part III)
  - Authority in charge: BCC
  - Deadline: Sep 30, 2021
  - Identified priority areas: assessment of the quality of bank assets, management of risks related to cybercrime or fintech, de-risking, and governance risks.
  - Status: PA
- 6. Strengthen dialogue with the banking profession and the institutional communication policy regarding special prudential measures and supervision policy in the pandemic context. (§ 36-37 and Annex 3, Part III)
  - Authority in charge: BCC
  - Deadline: Dec 31, 2021
  - Implementation note: Discussions between BCC senior management and the banking profession raised concerns related to Instruction 44 which were taken into account in the revision.
  - Status: FA
- 7. Delay the implementation of new prudential standards until after the pandemic. (§ 36-37 and Annex 3, Part III)
  - Authority in charge: BCC
  - Timeframe label: I
  - Implementation note: Implemented in terms of an increase in minimum capital requirements spread over three years with some restrictions.
  - Status: FA
- 8. Suspend reporting institutions’ decisions that negatively impact capital strengthening. (§ 36-37 and Annex 3, Part III)
  - Authority in charge: BCC
  - Timeframe label: I
  - Implementation note: Implemented. See revised Instruction 44.
  - Status: FA
- 9. Clarify how to temporarily relax the debt classification rules during the pandemic. Prepare for a rapid return to the pre-crisis rules. (§ 36-37 and Annex 3, Part III)
  - Authority in charge: BCC
  - Deadline: Sep 30, 2021
  - Implementation note: Implemented. See Instruction 44 as currently in force.
  - Status: FA
- 10. Clarify how receivables are provisioned during the pandemic. Prepare for a rapid return to the pre-crisis rules. (§ 36-37 and Annex 3, Part III)
  - Authority in charge: BCC
  - Deadline: Sep 30, 2021
  - Implementation note: Item above.
  - Status: FA
- 11. Study the possibility of relaxing the rules for calculating the solvency ratio to take into account the public guarantee provided for certain claims, where applicable. (§ 36-37 and Annex 3, Part III)
  - Authority in charge: BCC
  - Deadline: Dec 31, 2021
  - Implementation note: Study under way on the prospects for improving the State’s credit standing, particularly vis-à-vis the banking sector.
  - Status: ONG

### Business continuity, liquidity, reporting and temporary arrangements (Recommendations 12–17)
- 12. Identify elements of the business continuity plan (BCP) that need adjustment or supplementation to improve the resilience of financial institutions to the pandemic. (§ 36-37 and Annex 3, Part III)
  - Authority in charge: BCC
  - Deadline: Sep 30, 2021
  - Status: NA
- 13. Insist on the need for financial institutions to have sufficient liquidity in general, both in domestic currency (CDF) and in foreign currencies (including specifically in USD). (§ 36-37 and Annex 3, Part III)
  - Authority in charge: BCC
  - Deadline: Sep 30, 2021
  - Implementation note: Compliance is an ongoing obligation; in 2020 special measures, BCC committed to providing liquidity in domestic currency to institutions facing liquidity problems.
  - Status: ONG
- 14. Clarify the conditions for applying the legal obligation for financial institutions to have their annual accounts formally approved. (§ 36-37 and Annex 3, Part III)
  - Authority in charge: BCC
  - Deadline: Sep 30, 2021
  - Implementation note: Provision pared back in the new Instruction 44, since meetings can now be held both in person and by video conference.
  - Status: FA
- 15. Specify the modalities of financial reporting by financial institutions to ensure financial transparency as regards the impact of the pandemic. (§ 36-37 and Annex 3, Part III)
  - Authority in charge: BCC
  - Deadline: Sep 30, 2021
  - Implementation note: Could return to normal in 2022; semiannual reporting still being assessed by the BCC as too burdensome.
  - Status: ONG
- 16. Specify additional regulatory reporting statements, or any other information and data request, to better measure the impact of the pandemic on the financial and prudential situation and risks facing reporting institutions. (§ 36-37 and Annex 3, Part III)
  - Authority in charge: BCC
  - Timeframe label: I
  - Implementation note: In progress.
  - Status: ONG
- 17. Define the temporary arrangements for BCC organization and internal functioning with respect to missions on bank regulation and supervision during the pandemic and in readiness for the end of it. (§ 36-37 and Annex 3, Part III)
  - Authority in charge: BCC
  - Timeframe label: I
  - Implementation note: Ongoing; crosscutting action.
  - Status: ONG

### Early intervention and stress testing (Recommendations 18–19)
- Suspension of onsite inspections as of March 2020 (COVID-19) except at one problem bank.
- 18. Adapt the early intervention policy to deal with bank difficulties, without abandoning the use of legal powers when a situation warrants a decision to take preventive action. (§ 36-37 and Annex 3, Part III)
  - Authority in charge: BCC
  - Deadline: Dec 31, 2021
  - Implementation note: Awaiting adoption of new banking law.
  - Status: ONG
- 19. Prepare for the end of the crisis by conducting prospective stress tests on the banking sector. (§ 36-37 and Annex 3, Part III)
  - Authority in charge: BCC
  - Deadline: Dec 31, 2021
  - Implementation note: Technical assistance needed to set up a test model.
  - Status: NA

### IT risk supervision and related technical assistance (FSSR follow-up)
- FY 2021 - Virtual (COVID): Training on offsite and onsite supervision of IT risk in the banking sector; February 2021; 20MMI0204
- Need for technical assistance following FSSR.

Key recommendations and status:
- 1. Revise the methodological guide proposed in Annex I. (§ 24)
  - Authority in charge: BCC
  - Deadline: Jun 30, 2021
  - Implementation note: Work under way with IT supervisor team for an AFRITAC Central technical assistance mission in February 2022.
  - Status: ONG
- 2. Formally evaluate the experience of implementing the IT control benchmark developed by AFRITAC Central for the BCC in 2016. (§ 24)
  - Authority in charge: BCC
  - Deadline: Jun 30, 2021
  - Status: Pending ONG
- 3. Conduct a pilot onsite audit of a credit institution chosen by the BCC, covering IT risk topics in the guide. (§ 24)
  - Authority in charge: BCC
  - Timeframe: Short term
  - Status: Pending ONG
- 4. Analyze IT risk issues in the DRC’s banking system based on the control approach in the guide and formalize conclusions in a summary note. (§ 24)
  - Authority in charge: BCC
  - Deadline: Sep 30, 2021
  - Status: NA
  - Related note: Suspension of onsite inspections owing to the pandemic (one team fell ill during an inspection).
- 5. More precisely identify IT risk supervision issues which the BCC is confronted with and pose special implementation difficulties. (§ 24)
  - Authority in charge: BCC
  - Deadline: September 30, 2021
  - Implementation note: Prerequisite—data reliability and need for access to the database with appropriate tools without legal risk. See the draft banking law.
  - Status: NA
- 6. Publish recommendations to the banking industry on BCC’s expectations for appropriate implementation of sound IT risk management and control practices. (§ 24)
  - Authority in charge: BCC
  - Timeframe: Short term
  - Status: Pending NA
- 7. Following onsite training delivered by AFRITAC Central:
  - Finalize and validate the methodological guide;
  - Launch a campaign of onsite inspections in credit institutions focusing on IT risk;
  - Review the campaign and calibrate regulatory provisions, recommendations to the profession, and methodological guide accordingly.
  - Timeframes: Short term; Medium term; Medium term
  - Authority in charge: BCC
  - Status: Pending NA

### Payment institutions reform and roadmap
- FY 2021—Virtual (COVID): TA Review of prudential regulation n° 24 applicable to payment institutions; September 2020; 18MMA8538
Key recommendations and status:
- 1. Review and, if necessary, amend the 23 recommendations contained in the roadmap proposed to the BCC for finalizing the reform relating to the development of a comprehensive and coherent framework for the regulation and supervision of payment institutions and payment services. (§ 33-34, Annex I)
  - Authority in charge: BCC
  - Timeframe: I
  - Implementation note: Pending the law, the payment institution concept does not exist yet. The banking law would lift the requirement to be constituted as a credit institution.
  - Status: ONG
- 2. After internal consultation at the BCC between the departments involved, finalize the overall framework note for the reform. (§ 33-34, Annex I)
  - Authority in charge: BCC
  - Deadline: Dec 31, 2020
  - Status: Pending ONG
- 3. Identify and articulate the need for additional technical assistance to carry out the reform. (§ 35–36)
  - Authority in charge: BCC
  - Timeframe: I
  - Status: Pending ONG
- 4. Synchronize the reform with the current project to revise Law 003/2002 of February 2, 2002, on the activity and control of credit institutions, known as the “Banking Law”, to integrate the legal provisions concerning payment institutions. (§ 18)
  - Authority in charge: BCC
  - Timeframe: ST
  - Status: Pending ONG
- 5. Prepare a draft instruction on the prudential requirements applicable to payment institutions. (§ 21)
  - Authority in charge: BCC
  - Deadline: Apr 30, 2021
  - Status: Pending ONG

### Financial disclosure and reporting (FY 2020)
- FY 2020 - Virtual (COVID): TA Review of draft BCC regulation on financial disclosure (Pillar 3); April 20–30, 2020; 18MMA8535

Key recommendations and status:
- 1. Finalize the draft instruction to credit institutions on financial disclosure. (§ 18)
  - Authority in charge: BCC
  - Deadline: Dec 2020
  - Implementation note: Implemented. Waiting for the right moment to start consultation with the banking profession. Regulatory initiative suspended following COVID-19 recommendations from MCM and AFRITAC Central. Consultation could be done by email in Q1 2022.
  - Status: FA
- 2. Clarify the issue of maintaining IFRS as the basis for the published annual financial statements. (§ 18)
  - Authority in charge: BCC
  - Deadline: Dec 2020
  - Implementation note: Project is now part of the implementation of IFRS by the BCC as an enterprise.
  - Status: ONG
- 3. Publish the instruction with an explanatory memorandum and make a presentation to the banking industry on the BCC’s expectations. (§ 18)
  - Authority in charge: BCC
  - Deadline: Dec 2020
  - Implementation note: See item 1.
  - Status: ONG
- 4. Set up an internal organization appropriate to the DSIF to oversee the implementation of the new financial reporting requirements. (§ 18)
  - Authority in charge: BCC
  - Timeframe: ST
  - Implementation note: To be implemented after the instruction has entered into force.
  - Status: ONG
- 5. Within one year of the instruction’s entry into force, review the implementation of its provisions, with a view to updating it if necessary. (§ 18)
  - Authority in charge: BCC
  - Timeframe: LT
  - Implementation note: To be implemented after the instruction has entered into force.
  - Status: ONG
- 6. Update the instruction once the entire Basel framework has been transposed. (§ 18)
  - Authority in charge: BCC
  - Timeframe: LT
  - Implementation note: To be implemented after the instruction has entered into force.
  - Status: ONG

*Source: MCM Technical Assistance Mission to DRC, 2017–2021—Key Recommendations (as provided in the content unit).*

### Executive Summary

### Executive Summary

### Management of the DSIF scoring model
- Appoint four advisers to the DSIF to manage the scoring model:
  - a model methodology manager, and alternate;
  - a person responsible for the model’s IT maintenance, and deputy.
- Formalize objectives in a mission letter, with a view to optimizing the model by refining the calibration, continuing the tests, and implementing a permanent policy of quality control and adaptation of the model to changes in the Congolese banking sector environment. § 34
- Authority in charge: DSIF
- Status: I The dedicated team exists, letter formalizing the mission to come. Pending
- Recommendation label/notes appearing in text: ONG

### Testing, calibration, and technical guidance for the model
- Carry out a campaign to test all components of the rating model on a sample of at least 8 banks out of 17. § 35
  - Timeframe: April 30, 2020
  - Status: Implemented in June 2021. FA
- Recalibrate the indicators of the model for which the initial calibration used figures that seemed insufficiently robust. § 36
  - Authority in charge: DSIF
  - Timeframe: ST
  - Status: Done FA
- Calibrate and weight the model indicators that could not be calibrated during the mission owing to lack of available data. § 37
  - Authority in charge: DSIF
  - Timeframe: ST
  - Status: Implemented FA
- Develop, as needed, the range of regulatory reporting statements, to provide recurrent disclosure of numerical data useful for rating, to be integrated into the bank supervision application (BSA) system. § 38
  - Authority in charge: DSIF
  - Timeframe: ST
  - Status: Pending (models ready but not distributed to the banks) ONG
- Develop a technical operator’s guide, or methodological note, to assist the DSIF supervisors in proper implementation of the rating model. § 39
  - Authority in charge: DSIF
  - Timeframe: MT
  - Status: Pending ONG
- Prior to rating a bank, systematically interview the senior management and operational managers, to gather information and answers to any questions for which information is lacking. If necessary, for certain figures, enhance reporting in the BSA system. § 38
  - Authority in charge: DSIF
  - Timeframe: MT
  - Status: To be systematized ONG

### Data quality, quality control, and supervisory use of the rating tool
- Urgent need for the BCC to more effectively ensure the quality of the data disclosed by reporting institutions and of the information reprocessed in the DSIF; the level of anomalies observed remains unsatisfactory. The structuring of a quality control function, equipped with the appropriate resources and tools, and an increase in the severity of the BCC toward institutions identified as submitting data or information of poor quality, would seem essential. § 54
  - Authority in charge: DSIF
- REMINDER: Set up the quality control process for regulatory information disclosed by reporting institutions and for data reprocessed internally by the DSIF. § 30
  - Authority in charge: DSIF
  - Timeframe: ST
  - Status: Pending NA
- REMINDER: Undertake a campaign to verify primary financial data (reported by credit institutions) and secondary financial data (reprocessed by DSIF for analysis), to provide a sound basis for the prudential supervision process. Set up a permanent quality assurance function within the DSIF to guarantee the reliability of data from reporting institutions. § 11
  - Authority in charge: BCC
  - Timeframe: ST
  - Status: Pending NA

### Operational supervision policy and risk-based supervision roadmap
- Conduct a comprehensive review of the BCC’s overall bank supervision processes, with a view to developing a roadmap for reforms that remain incomplete, and thus finalize the full implementation of risk-based supervision. MT Pending ONG
- Take into account the new rating tool, which is expected to become the pivotal process of permanent control and the foundation of risk-based supervision. Develop an operational supervision policy at the DSIF level, so that the results of the rating process, combined with the impact analysis, enable the BCC to adopt appropriate, early, and proportionate supervisory measures to address the fragilities identified. § 41–43
  - Authority in charge: DSIF

### ICAAP / ILAAP / SREP project and governance/internal control workstream
- Set up an ICAAP/ILAAP/SREP project management structure with a steering committee and a technical committee, bringing together experts with a diverse profile, under the responsibility of an appointed project head manager. § 20
  - Authority in charge: BCC
  - Timeframe: LT
  - Status: Pending (team already exists informally). ONG
- Develop an operational plan of action to implement the proposed “roadmap”, including a detailed statement of ICAAP/ILAAP/SREP project objectives, stages, deadlines, etc., validated at the top level of the BCC. § 20
  - Authority in charge: BCC
  - Timeframe: LT
  - Status: Pending ONG
- When the time comes, set up a joint committee of experts from the BCC and the banking industry to coordinate the progress of the ICAAP/ILAAP/SREP project among all stakeholders. The committee would be led by an appointed official at an appropriate level of authority, with a very specific mission letter and roadmap. § 20
  - Authority in charge: BCC
  - Timeframe: LT
  - Status: Pending ONG
- Conduct a final review and validation of the three methodological notes on governance, internal control, and risk management. § 21
  - Authority in charge: BCC
  - Timeframe: ST
  - Status: To be implemented by the Division responsible for the ongoing supervision of banks and other financial intermediaries ONG
- Conduct one or more onsite thematic oversight missions on governance, internal control, and risk management, to test the methodology in the field, prepare an experience report, and adjust or refine the related notes as necessary. § 21
  - Authority in charge: BCC
  - Timeframe: MT
  - Status: To be planned after the COVID-19 suspension. ONG

### Legal and regulatory reforms, revised banking law, and instructions
- Formally request assistance from the IMF’s Legal Department (LEG), through the Monetary and Capital Markets Department, to review the draft revised banking law, currently before Parliament, with a view to aligning it with the latest international standards and the new revised instructions. § 21
  - Authority: BCC, with IMF technical assistance (MCM/LEG), subject to formal request by BCC and acceptance by IMF
  - Status: I Implemented. FA
  - Note: Draft law introduced in December 2021.
- As part of Recommendation 1, list all changes to be made to the draft revised banking law and propose a new revised banking law. § 22
  - Authority in charge: BCC (IMF technical assistance, if necessary)
  - Timeframe: Dec 2018
  - Status: Implemented. FA
  - Note: Draft law introduced in December 2021.
- Forge agreement between the DSIF and the Legal Affairs Department (DJ), under the auspices of BCC top management, to definitively settle any legal issues that may be raised by the revised instructions, without calling into question the strategic options adopted during previous missions. § 23
  - Authority in charge: BCC
  - Status: I Implemented. FA
  - Note: Draft law introduced in December 2021.
- Have the Governor of the Central Bank of the Congo sign the revised instructions and publish them through official channels, providing for a one-year transition period before they come into effect. Arrange for close supervision of the institutions subject to the instructions during the transition period, in terms of the action plans they will need to produce to ensure full compliance with the provisions of the instructions by the deadline for entry into force. § 24
  - Authority in charge: BCC
  - Timeframe: Dec 2018
  - Status: Implemented in 2019 FA

### Implementation of revised instructions, systems, and applications
- Maintain the DSIF working group as the focal point for the banks to make sure the revised instructions are applied consistently. § 25
  - Authority in charge: BCC
  - Status: I This is an informal group consisting of DSIF managers and other experts. FA
- Set up an internal network of expert supervisors (designated as “référents”) with capacity to train and answer questions from their supervisory colleagues, and even from banks, on the application of the new provisions. Extend this approach in terms of structured organization of a “competency hub” within the DSIF to all relevant issues. § 26
  - Authority in charge: BCC
  - Timeframe: June 2019
  - Status: Pending FA
- Carry out an official structured and educational communication action targeting the banking profession and statutory auditors, to explain the main changes introduced by the revised instructions and make known the supervisors’ expectations for their implementation. Respond to comments made by the Congolese Banks Association (ACB) on the draft revised instructions. § 27
  - Authority in charge: BCC
  - Timeframe: March 2019
  - Status: Implemented prior to the release of the instructions (with participation by AFRITAC Central and the BCC Governor). FA
- Establish a structured crosscutting function in the DSIF to manage the internal procedures and control methodology, to ensure effective appropriation and implementation of the new texts by the supervisors, and to standardize the methods of onsite and offsite supervision. § 28
  - Authority in charge: BCC
  - Timeframe: Dec 2018
  - Status: In principle, draft operational procedures are developed by members of a department, coordinated by the managers for the first validation. ONG
- Prepare a methodological guide for the onsite control of the new prudential provisions, continuing the work begun by AFRITAC Central. § 29
  - Authority in charge: BCC (possible technical assistance from AFRITAC Central)
  - Timeframe: Sep 2019
  - Status: To be completed ONG
- Update the CAMELS/ORAP rating tool to adjust the criteria for assessing the institutions’ risk profile, taking into account changes introduced by the recently revised instructions (including quantitative Instructions 14 and 16), to make this tool truly operational within the DSIF and become the preferred and standard instrument of permanent control in risk-based supervision. § 30
  - Authority in charge: BCC (possible technical assistance from AFRITAC Central)
  - Timeframe: Dec 2019
  - Status: The SYSNOB application was set up as a scoring system ONG
  - Note: The rating system has been used in a test environment, but has yet to be integrated into the standard risk-based monitoring process.
- Finalize the development of standard applications for approval and prior authorization. § 31
  - Authority in charge: BCC
  - Timeframe: Mar 2019
  - Status: Pending ONG

### Training, competency development, and supervisory capacity
- Set up a function within the DSIF to periodically identify bank supervisors’ training needs, and develop and implement a comprehensive and coherent training plan to build both individual capacity and the collective capacity of the DSIF. § 30 (REMINDER, Recommendation 8 of Report 6666758, adjusted)
  - Authority in charge: BCC
  - Timeframe: ST
  - Status: Already implemented by the relevant managers, for the compilation of training needs each year end. FA
  - Note: “Function” means an organized process, not the creation of a new unit; could be internal to DSIF or coordinated with the Human Resources Department.
- Establish a structured crossfunctional training unit in the DSIF, to identify training needs in relation to recently revised regulations, and more broadly to identify other training needs and provide more in-house basic training through better sharing of experiences and lessons learned from external training events. § 32
  - Authority in charge: BCC
  - Timeframe: Mar 2019
  - Status: See above FA
- Designate trainer-trainers within the DSIF who are able to provide their colleagues with appropriate training in relation to the previously identified needs. § 33
  - Timeframe: Jun 2019
  - Status: To be considered in the context of a reorganization of the DSIF. ONG
- Deepen the operational training of supervisors on the most technical points included in the revised instructions: risk mapping, determination of risk appetite and tolerance, stress tests, contingency plans, etc. § 34
  - Authority in charge: BCC
  - Timeframe: Jun 2019
  - Status: Implemented with support from AFRITAC Central. To be repeated for good assimilation. FA

*Source: Executive Summary, 1codea2022004 - Executive Summary*

### Annex 3 to this report. § 20–21

### Annex 3 to this report. § 20–21

### Consultation schedule and regulatory closure
- Authority in charge: BCC
- June 2018 Implemented FA
- The schedule for consultation with the banking profession should set a hard deadline of August 15, 2018, for the receipt of responses by the DSIF.
- Rationale: so that, before the final AFRITAC Central mission which will close the regulatory project, from September 3 to 14, 2018, the DSIF will be able to collate the responses in a summary table and make an initial analysis of the comments received. § 21
- Authority in charge: BCC
- Aug 2018 Implemented FA

### Standard applications, approvals, and project status
- Recommendation: Finalize the development of standard applications for approval and prior authorization, started at the end of the mission by a working group of junior supervisors supervised by an experienced DSIF manager to be appointed, with the aim of producing results for review by AFRITAC Central during the last technical assistance mission. § 22
- Authority in charge: BCC
- Sep 2018 Pending (see above) ONG
- Status notes: Finalize the standard application forms (templates) for seeking the approval of institutions and directors, to specifically review governance, internal control, and risk management systems, whether in place or planned, at the approval stage. § 18
  - Authority in charge: BCC
  - ST Pending ONG

### Specific regulatory initiative: international money transfer companies
- Authority in charge: BCC
- FY 2019—Banking Regulation and Supervision 4; March 11–22, 2019; 18MMA8511
- Recommendation 1: Launch discussions to make international money transfer companies subject to official approval by the BCC when they operate in Congolese territory under their own brand name, even if through partnerships established with regulated institutions. § 19
  - Authority in charge: BCC
  - MT
  - In progress. Draft Instruction 006, Amendment 2, finalized. Consultations held with the profession.
  - ONG
  - Note: Regulatory initiative suspended following COVID-19 recommendations by MCM and AFRITAC Central.

### Data quality, supervision procedures, and early intervention
- Recommendation 2: Conduct a campaign to verify primary financial data (reported by banks) and secondary financial data (reprocessed by DSIF for analysis), to ensure a sound basis for financial analysis. Set up a quality assurance function within the DSIF to guarantee the reliability of the banks’ data. § 23
  - Authority in charge: BCC
  - ST
  - Pending. To be made permanent, taking other prerequisites into account, such as the IT audit and access to the banks’ databases to ensure implementation of the current accounting framework.
  - ONG
- Recommendation 3: Issue rules on the use to be made, within the framework of the permanent and onsite control process, of the financial data published in the banks’ IFRS financial statements, given the persistent difficulties of finalizing the exhaustive and reliable delivery of the financial statements pursuant to IFRS. § 24
  - Authority in charge: BCC
  - MT
  - See above on the same concern ONG
- Recommendation 4: Finalize the three bank studies that were incomplete at the end of the mission. Extend the analysis to the eleven other banks subject to supervision. § 25
  - Authority in charge: BCC
  - ST To be abandoned. Completion of this recommendation issued in 2019 is no longer relevant in 2022.
- Recommendation 5: Through an internal DSIF procedure, formalize the process of systematically making an analysis of the financial situation of each bank, at a frequency adapted to the risk profile. § 26
  - Authority in charge: BCC
  - An informal process exists and is applied by Ongoing Supervision, on a monthly basis for large banks, or otherwise quarterly; but there is no formalized internal process.
  - FA
- Recommendation 6: Through an internal DSIF procedure, design the BCC’s early intervention process, to organize preventive treatment of the fragilities highlighted by the studies. § 27
  - Authority in charge: BCC
  - MT
  - To be implemented, taking into account the innovations in the draft banking law.
  - ONG
  - MCM comment: Propose technical assistance on early intervention and recovery in the FSSR Roadmap.
- Recommendation 7: Conduct regular formal reviews of the financial analysis report template, as part of the ongoing adaptation of the risk-based supervision methodology, and have amendments approved by DSIF management. § 28
  - Authority in charge: BCC
  - MT Pending ONG

### Supervisory capacity building, training, and methodological notes
- Recommendation 8 (=REMINDER=): Establish a function, either strictly internal or coordinated with Human Resources, to regularly identify bank supervisors’ training needs and include them in a coherent plan of training actions. § 29
  - Authority in charge: BCC
  - ST See supra FA
- Recommendation 9 (=REMINDER=): Appoint trainer-trainers within the DSIF to provide practical training in financial analysis and other identified capacity-building areas. § 30
  - Authority in charge: BCC
  - MT See supra NA
- Recommendation 10: Finalize, validate, and circulate within the DSIF the two methodological notes concerning the onsite control of governance and the internal control system. § 15–17
  - Authority in charge: BCC
  - ST To be finalized (projects exist but not validated). ONG
- Recommendation 11: Implement a support and supervision strategy appropriate to each reporting institution, including communication and support measures, close monitoring interviews, and onsite inspections, to ensure effective implementation of the revised prudential instructions. § 31
  - Authority in charge: BCC
  - ST Pending ONG

### IFRS migration project — unit restructuring, tools, and enforcement (FY 2018)
- Authority in charge: BCC
- FY 2018 - Capacity development of the BCC for implementing banking supervision based on IFRS standards 5; April 16–27, 2018; 18MMG1000
- Recommendation 1: Update Instruction 19 on competencies and qualifications required of the statutory auditors (commissaires aux comptes – CACs) and on the International Standards on Auditing (ISA). § 37
  - ST Implemented FA
- Recommendation 2: Hold quarterly meetings with the CACs during the transition phase to ensure their active involvement in corrective actions. § 37
  - ST Restart the process. ONG
- Recommendation 3: Formalize a strategic plan, approved by the BCC Governor, setting a deadline by which: (i) banks must fully comply with the BCC’s requirements to submit IFRS financial statements; and (ii) the DSIF must be able to review and audit the financial statements submitted by banks pursuant to IFRS, without external assistance. § 13
  - ST Pending NA
- Recommendation 4: Restructure the IFRS Unit at the DSIF by allocating appropriate resources and means, formalizing internal procedures, specifying terms of reference, setting precise objectives, and ensuring regular high-level follow-up with DSIF and BCC senior management. § 13
  - ST Pending NA
- Recommendation 5: Develop the tools needed to analyze the quality of IFRS financial statements submitted by banks. § 36
  - MT Pending NA
- Recommendation 6: Update the DSIF summary table showing the status of the IFRS project at the banks. § 36
  - ST Pending NA
- Recommendation 7: Send letters reminding banks, audit committees, and CACs to fulfill obligations to deliver IFRS financial statements. § 37
  - ST To be relaunched NA
- Recommendation 8: Following expiry of the transition period established by the BCC, sanction banks that do not submit IFRS financial statements or whose statements contain unacceptable quality defects. § 37
  - MT Pending NA
- Recommendation 9: Schedule thematic audits of banks on IFRS implementation: documentary audits by the IFRS Unit and onsite audits by Onsite Supervision Department. § 37
  - ST To be relaunched NA
- Recommendation 10: Verify the effective existence of an IFRS technical unit in each bank required to issue IFRS financial statements. § 32
  - ST To be relaunched NA
- Recommendation 11: Organize regular bilateral meetings (once every six months) with senior management of each reporting bank to monitor progress toward full migration to IFRS. § 37
  - MT Pending NA
- Recommendation 12: Train DSIF supervisors on IFRS financial statement analysis focusing on the key IFRS. § 36
  - ST To be studied NA
- Recommendation 13: Organize work sessions on financial statement analysis, with the IFRS Unit acting in a trainer-training role for documentary and onsite auditors. § 36
  - MT To be relaunched NA
- Recommendation 14: Organize a roundtable with members of banks’ audit committees on quality of IFRS financial statements. § 37
  - ST To be relaunched NA
- Recommendation 15: Require each bank to conduct a study on the need to adapt its IT system to apply IFRS modules (IAS 16, IFRS 9, IFRS 7, etc.) and communicate results to the BCC. § 32
  - ST To be relaunched NA
- Recommendation 16: Require each bank to develop a specific action plan with stages and timelines for implementation of IFRS 9, IFRS 7, IAS 24, and IAS 19, to be communicated to the BCC. § 32
  - MT To be relaunched as part of the project on all of the standards of this accounting framework NA
- Recommendation 17: Require each bank to appoint a financial and accounting manager with expertise in IFRS, and put in place capacity building (training, recruitment); failing that, require support by an external consultant experienced in IFRS. § 32
  - ST To be relaunched NA
- Recommendation 18: Require banks to plan and conduct training sessions targeting IFRS 7, IAS 39/IFRS 9, IAS 19 and IAS 24 to enhance ownership and strengthen accounting integrity. § 32
  - MT To be relaunched NA
- Recommendation 19: Require registered CACs to train and strengthen their audit teams with partners and associates of proven IFRS expertise, and justify capabilities to the BCC. § 32
  - ST To be relaunched NA
- Recommendation 20: Establish an action plan for implementation of IFRS 9, approved by the BCC Governor, including amendment of Instruction 16 on rating and provisioning of nonperforming loans. § 39–43
  - MT To be studied separately from the IFRS project ONG
  - Preparation of an AFRITAC Centrale technical assistance in Q1 2022.
- Recommendation 21: Organize a training session for banks on the use of analytical modules to apply IFRS 9. § 39–43
  - ST To be relaunched NA

### Review of prudential qualitative banking regulation and draft banking law amendments (FY 2018)
- Authority in charge: BCC
- FY 2018 - Review of BCC’s prudential qualitative banking regulation (second mission) - Part II; February 12–23, 2018; 18MMA8502
- Recommendation 1: Propose amendments to the draft revised banking law (under review since 2013) to align several articles with the new provisions of the qualitative prudential instructions revised with AFRITAC Central support. (see § 30)
  - Authority in charge: BCC (and IMF if the BCC formally requests technical assistance)
  - May 2018 Implemented FA
  - MCM comment: Draft law introduced in December 2021.
- Recommendation 1.1: In the context of Recommendation 1, propose including in the banking law a definition of “director” (dirigeant) in accordance with international standards and the OHADA law, and compatible with the BCC’s qualitative regulations. This restates Recommendation 11 from July 2017. Deadline extended from December 2017 to May 2018. (see § 31)
  - Authority in charge: BCC
  - May 2018 Implemented FA
  - MCM comment: Draft law introduced in December 2021.
- Recommendation 1.2: Propose addition of a new article in Title II, Chapter II of the draft banking law to legally underpin the BCC’s intervention in the event of termination of functions of heads of sensitive functions previously approved. This restates Recommendation 12 from July 2017. Deadline extended from December 2017 to May 2018.
  - May 2018 Implemented FA
  - MCM comment: Draft law introduced in December 2021.
- Recommendation 1.3: Propose that a provision on professional secrecy be included in the draft banking law, specifying in particular that it cannot be enforced against the BCC. (see § 33)
  - Authority in charge: BCC
  - May 2018 Implemented FA
  - MCM comment: Draft law introduced in December 2021.

*Source: Annex 3 to this report. § 20–21*

### 1.4 In the context of Recommendation 1, propose inclusion in

### 1.4 In the context of Recommendation 1, propose inclusion in

### Recommendations and responsible authority
- Propose inclusion in the draft banking law of provisions relating to the sanctions applicable to statutory auditors and their deputies; propose clarification and specification of the function of “auxiliary of the BCC” conferred on the auditor by the BCC. (See § 34 to 36)  
  - Authority in charge: BCC  
  - Timeframe/status: May 2018; Implemented FA  
  - Note: Draft law introduced in December 2021.
- Definitively list the approvals that must be granted by the BCC to individuals involved in the administration, executive management, or responsibilities with sensitive functions of a credit institution, pursuant to the provisions of the BCC’s revised Instruction 17. (see § 32)  
  - Authority in charge: BCC  
  - Timeframe/status: May 2018; Implemented FA
- Finalize the glossary of common terms in the BCC’s prudential regulations, and issue as an instruction to give it regulatory force. The instruction should include the batch of instructions 17, 18, 19, 21 and 22, to be finalized jointly. (see § 37)  
  - Authority in charge: BCC  
  - Timeframe/status: June 2018; Implemented (definitions are included at the start of each instruction) FA
- Address the remaining prudential options that are outstanding at the conclusion of this technical assistance mission.  
  - Timeframe/status: June 2018; Implemented FA

### Implementation actions and specific recommendations (selected items)
- Obtain a formal opinion on the draft revised instructions from the BCC’s Legal Affairs Department. (see § 38)  
  - Authority in charge: BCC
- Conduct a formal review of the quantitative prudential regulations (Instructions 14, 16 and 23), to harmonize the format and terminology used with those of the qualitative instructions currently under review. (see § 41)  
  - Authority in charge: BCC  
  - Timeframe/status: Dec 2018; Implemented FA
- Include, in Instruction 23 on disciplinary powers, appropriate sanctions for breaches of the new regulatory requirements concerning internal control and risk management. (restatement of Recommendation 9 from July 2017 mission report; deadline changed from December 2018 to September 2018)  
  - Authority in charge: BCC  
  - Timeframe/status: Sep 2018; Implemented in 2021 (revision of Instruction 23) FA
- Critically review Instruction 17 to harmonize provisions in light of mission guidance (e.g., harmonize IT security organization provisions contained in Instructions 17 and 22).  
  - Authority in charge: BCC  
  - Timeframe/status: May 2018; Implemented (new instruction issued in May 2019) FA

### Training, supervisory tools, and capacity building
- Internally identify the initial and ongoing training needs of all bank supervisors under a standardized framework.  
  - Recommendation 1 (DSIF) Q1 2018; Implemented FA
- Identify potential trainer-trainers among the most experienced DSIF supervisors.  
  - Recommendation 2 (DSIF) Q1 2018; Pending with the Human Resources Department. ONG
- Set up a crosscutting training function to cover initial and ongoing training needs on a recurring and structured basis; if possible internally, or failing that, seek external specialized resources.  
  - Recommendation 3 (BCC) Q2 2018; Idem point 2 ONG
- Develop a plan to provide training in the DSIF on the new regulations updated to align with best practices in risk-based supervision.  
  - Recommendation 4 (DSIF) Q3 2018; To be relaunched ONG
- Carry out a mission to (i) adapt the CAMELS/ORAP rating instrument and develop the format of the annual bank studies; (ii) provide practical training for supervisors; and (iii) integrate revised tools into the risk-based supervision methodology.  
  - Recommendation 5 (DSIF + technical assistance) Q2 2019; Partially implemented. PA  
  - Note: Point (i) achieved through implementation of the SYSNOB scoring tool.
- FY 2018 — Training delivered: Training of junior BCC supervisors to risk-based supervision, internal control, and risk management; Nov 27–Dec 8, 2017; 17MMW3711

### Regulatory sequencing, instruction publication, and legal alignment
- Provide for simultaneous publication of the five Instructions, Nos. 17 (Internal control), 18 (Approval of institutions and directors), 19 (Rules on the auditing of credit institutions), 21 (Governance), and 22 (Risk management).  
  - Dec 2018; Implemented FA
- Suspend publication of Instructions 19 (Approval of statutory auditors) and 21 (Governance) and add their review to the working group's remit to ensure consistency.  
  - Feb 2018; Implemented FA
- Start promulgation of finalized draft instruction on business continuity planning without delay.  
  - Sep 2017; Implemented FA
- Extract from Draft Instructions 17 (Internal control) and 22 (Risk management) the provisions concerning the control of outsourcing of essential activities and services, to make them rapidly binding.  
  - Dec 2017; Implemented FA
- Consider reinvigorating the regulatory function in the DSIF; make the working group on regulatory review permanent in the DSIF; involve BCC’s Legal Affairs Department.  
  - Sep 2017; Implemented. Decision made to set up a “Studies and Regulations” entity within the DSIF dedicated to regulatory monitoring. FA
- Progressively complete the glossary of terms common to regulatory instructions.  
  - Dec 2018; Implemented. Definitions are included at the start of each Instruction. FA
- Have the DSIF and the BCC Legal Affairs Department make a technical review of documents produced during this mission to finalize drafting of Instructions 17 and 22; submit controversial points to BCC top management if necessary.  
  - Feb 2018; Implemented FA
- Seek an opinion from the BCC Legal Affairs Department on proposed regulatory provisions that derogate from ordinary law (e.g., prior agreement of the BCC for dismissal of auditors; suspension of payment for intra-group outsourced services in the event of difficulties).  
  - Feb 2018; Implemented FA
- Draft revisions to Instruction 22 relating to financial risks (credit, foreign exchange/market, interest rate, liquidity, settlement/delivery).  
  - Feb 2018; Implemented FA

### Draft banking law amendments and legal provisions incorporated
- Amend Article 26 of the draft banking law to align the definition of senior officials / directors to be authorized by the BCC with the provisions of the new regulatory framework (licensing of officers, governance, role in internal control and risk management).  
  - Sep 2017; Implemented FA  
  - Note: Draft law introduced in December 2021.
- Include an article in Title II, Chapter II of the draft banking law to legally underpin the BCC’s intervention upon the termination of the duties of authorized officials.  
  - Sep 2017; Implemented FA  
  - Note: Draft law introduced in December 2021.
- Include in Title III of the draft banking law an article that legally allows the BCC to suspend payment for intra-group outsourced services where such payment would jeopardize the financial or prudential position of a reporting institution.  
  - Sep 2017; Implemented FA  
  - Note: Implemented in Instruction 44 amended in December 2021.
- Critically review the draft banking law before adoption by Parliament to rationalize organization and presentation and identify needs for additional amendments on issues outside the mission scope (e.g., resolution mechanisms).  
  - Sep 2017; Implemented FA  
  - Note: Draft law introduced in December 2021.

*Source: 1codea2022004 - 1.4 In the context of Recommendation 1, propose inclusion in*

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_Source: https://www.imf.org/-/media/files/publications/cr/2022/english/1codea2022004.pdf_