Economy May 28, 2024 | 4:47 pm

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Organic Law of the Reserve Bank now in force

Santo Domingo.- The new Law 13-24 governing the Reserve Bank of the Dominican Republic has come into effect following its promulgation by President Luis Abinader and publication in the Official Gazette.

Key updates in the legislation include adapting the bank’s name to Banco de Reservas de la República Dominicana – Banco Múltiple and ensuring the institution operates in alignment with the dynamic and competitive financial sector. The bank’s capital is set at RD$39,000 million, which can be adjusted by the board of directors as per the Monetary and Financial Law, without legislative approval, as long as the changes are from capital reserves.

The new law removes the general tax exemption previously enjoyed by the Reserve Bank, leveling the playing field with other Dominican financial institutions. It also changes the title of the head from “general administrator” to “executive president,” aligning with national and international banking norms without altering the organizational structure or roles.

“This is the first significant update to Banreservas’ regulations in 61 years, modernizing the bank to be more agile and customer-focused, enabling it to better handle digital transformation, innovation, and environmental sustainability,” said the bank’s executive president, Samuel Pereyra.

The board of directors will consist of 14 members: the Minister of Finance (who will continue to preside), the bank’s CEO, and 12 members appointed by the Executive Branch, including three recommended by the Monetary Board as independent members. The law eliminates substitute members, making previous substitutes regular members without increasing the board’s size.

Upon leaving their roles, board members, except the Minister of Finance, cannot engage in management, advisory, or legal representation activities in financial intermediation entities for one year.

The State remains the sole shareholder of Banreservas and will receive 40% of its profits, with 15% allocated for covering state debts with the bank. The remaining 60% of profits will go to the bank’s equity reserves. The law introduces new regimes to protect the bank’s integrity, streamline processes, and enhance transparency.

Additional provisions ensure the bank operates under the same rules as other multiple banks, promoting competitiveness. The Bank’s Retirement and Pension Plan and existing employee rights remain unchanged. The legislation updates the bank’s governance, structure, and operations to align with current economic conditions, inclusivity, fiduciary duties, and confidentiality requirements.

The law also strengthens transparency and accountability, and underscores Banreservas’ role in promoting the economic and social development of the Dominican Republic.

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