National Reserve Bank of Tonga Act
1988 Revised Edition
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NATIONAL RESERVE BANK OF
TONGA ACT
National Reserve Bank of Tonga Act CAP. 102 Arrangement of Sections
1988 Revised Edition
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NATIONAL RESERVE BANK OF TONGA ACT
Arrangement of Sections
Section
PART I. - PRELIMINARY 7
1 Short Title and Commencement. .....................................................................7
2 Interpretation....................................................................................................7
PART II. - CONSTRUCTION 9
3 Establishment of National Reserve Bank of Tonga. ........................................9
4 Principal purposes of the Bank. .......................................................................9
5 Offices, branches, agents and correspondents. ................................................9
PART III. - CAPITAL, RESERVES AND PROFITS 10
6 Capital. ...........................................................................................................10
7 General Reserve. ............................................................................................10
8 Profits.............................................................................................................10
PART IV. - BOARD, MANAGEMENT AND EMPLOYEES 11
9 Board, its powers and responsibilities ...........................................................11
10 Membership of the Board. .............................................................................11
11 Appointment of Chairman, Deputy Chairman and Governor........................11
12 Remuneration of directors..............................................................................11
13 Resignation and Disqualification. ..................................................................12
14 Appointment to fill a vacancy........................................................................12
15 Duties of the Governor...................................................................................12
16 Meetings of the Board....................................................................................13
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17 Power to appoint Deputy Governor, officers and employees.........................14
18 Conflicts of interest. .......................................................................................14
19 Secrecy. ..........................................................................................................14
20 Personal immunity of directors, officers and employees. ..............................15
PART V. - CURRENCY 15
21 Monetary unit. ................................................................................................15
22 Sole right to issue currency. ...........................................................................15
23 Defacement of notes.......................................................................................15
24 Legal tender....................................................................................................15
25 Manufacture and characteristics of currency..................................................16
26 Power of recall. ..............................................................................................16
27 Issue, withdrawal and exchange of currency..................................................16
28 Recovery of lost, stolen mutilated or otherwise damaged currency...............17
29 Counterfeit currency.......................................................................................17
PART VI. - EXTERNAL RESERVE, FOREIGN EXCHANGE
OPERATIONS AND REVALUATION RESERVE ACCOUNT. 17
30 External Reserve. ...........................................................................................17
31 Value of External Reserve..............................................................................18
32 Operations in foreign exchange and precious metals. ....................................18
33 Revaluation Reserve Account. .......................................................................18
34 External value.................................................................................................19
35 Exchange rates................................................................................................19
PART VII. - TRANSFER OF ASSETS AND LIABILITIES 20
36 Transfer of Assets and Liabilities...................................................................20
PART VIII.--RELATIONS WITH FINANCIAL INSTITUTIONS 20
37 Opening accounts for financial institutions....................................................20
38 Operations with account holders. ...................................................................21
39 Required reserves of financial institutions. ....................................................21
40 Regulation of interest and credit. ...................................................................22
41 Foreign Exchange Positions ...........................................................................23
42 Minimum holdings of unimpaired liquid assets. ............................................23
43 Local assets ratio. ...........................................................................................24
PART IX.-SUPPLY OF INFORMATION 24
44 Supply of Information. ...................................................................................24
45 Extension of time limit for provision of documents and information. ...........25
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PART X. - RELATIONS WITH AND FOR THE GOVERNMENT 25
46 Bank to be principal banker, fiscal agent and depository for the
Government. ..................................................................................................25
47 Agent for the administration of Acts relating to banking and exchange
control. ...........................................................................................................25
48 Advances to Government and Statutory Corporations. (Cap. 109) ...............25
49 Acquisition of Government securities etc......................................................26
50 Policy directives.............................................................................................26
51 Depository and fiscal agency of international financial institutions and
supranational organizations. (Cap. 104) ........................................................26
PART XI. - ACCOUNTS AND STATEMENTS 27
52 Financial year.................................................................................................27
53 Accounts. .......................................................................................................27
54 Publication of accounts and annual report and monthly return......................27
PART XII. - GENERAL 28
55 Exemption from taxes and duties...................................................................28
56 Bank of Tonga and Tonga Development Bank. (Cap. 105. Cap. 106) ..........28
57 Prohibited activities. ......................................................................................28
58 Prohibited names............................................................................................28
59 Bank holidays. ...............................................................................................29
60 Responsibility and communication................................................................29
61 Regulations. ...................................................................................................29
PART XIII. - REPEAL 29
62 Repeal and Saving. ........................................................................................29
63 Application of other laws. (Cap. 109)............................................................30
National Reserve Bank of Tonga Act CAP. 102 Section 1
1988 Revised Edition
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C
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NATIONAL RESERVE BANK OF TONGA ACT
Act 48 of 1988
AN ACT TO ESTABLISH THE NATIONAL RESERVE BANK OF
TONGA AND FOR PURPOSES CONNECTED THEREWITH
Commencement [31st January 1989]
PART I. - PRELIMINARY
1 Short Title and Commencement.
(1) This Act may be cited as the National Reserve Bank of Tonga Act.
(2) Part V and section 62 of this Act will not come into operation until the
day appointed under section 36.1
2 Interpretation.
In this Act, unless the context otherwise requires —
“Bank” means the National Reserve Bank of Tonga established under
section 3;
1 Part V and section 62 came into operation on 1 July 1989 vide G. 109/89.
Section 2 CAP. 102 National Reserve Bank of Tonga Act
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“bank” means any financial institution whose business includes the
acceptance of deposits of money transferable by cheque or other means of
third party transfer;
“banking business” means:
(i) the business of receiving funds through the acceptance of
deposits of money payable upon demand or after a fixed
period or after notice, or any operation through the frequent
sale or placement of bonds, certificates, notes or other
securities, and the use of such funds either in whole or in part
for loans or investments for the account and at the risk of the
person doing such business; and
(ii) any other activity recognized by the Bank as customary
banking practice which a financial institution engaging in the
activities described in (i) may additionally be authorized to
do by the Bank;
“Board” means the Board of Directors of the Bank established under
section 9;
“Chairman” means the Chairman of the Board;
“credit institution” means a financial institution other than a bank;
“currency” means currency note or coin;
“Deputy Chairman” means Deputy Chairman of the Board;
“Deputy Governor” means the Deputy Governor of the Bank appointed
under section 17;
“director” means a member of the Board;
“financial institution” means an institution doing banking business:
Provided that, for the purposes of this Act, unless otherwise
specified, all offices and branches of a financial institution in Tonga
shall be deemed to be one financial institution;
“Governor” means the Governor of the Bank appointed under section ll;
“Minister” means the Minister of Finance;
“statutory corporation” means a body corporate other than a financial
institution, established under any written law, other than a law relating to
the formation and registration of companies:
Provided that for the purposes of this Act any company in which
His Majesty's Government owns a majority of the share capital
shall be deemed to be a statutory corporation.
National Reserve Bank of Tonga Act CAP. 102 Section 3
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PART II. - CONSTRUCTION
3 Establishment of National Reserve Bank of Tonga.
(1) The National Reserve Bank of Tonga is hereby established in accordance
with the provisions of this Act.
(2) The Bank shall —
(a) be a body corporate with perpetual succession and a common seal;
(b) be capable of entering into contracts, suing or being sued in its
own name;
(c) subject to the provisions of this Act, have power to acquire, hold
and dispose of real and personal property;
(d) have power to make such expenditure as it deems necessary for the
proper discharge of its functions.
4 Principal purposes of the Bank.
The principal purposes of the Bank shall be —
(a) to regulate the issue of currency, and the supply, availability and
international exchange of money;
(b) to manage the external reserves of the Kingdom;
(c) to promote monetary stability;
(d) to promote a sound financial structure;
(e) to foster credit and exchange conditions conducive to the orderly
and balanced economic development of the Kingdom;
(f) to provide advisory services to the Minister on banking and
monetary matters;
(g) to be the principal banker and fiscal agent of the Government;
(h) to undertake banking business, in Tonga or elsewhere, subject to
the provisions of this Act;
(i) to undertake the licensing and supervision of financial institutions.
5 Offices, branches, agents and correspondents.
The Bank shall have its head office in Nuku'alofa and may establish branches
within Tonga, appoint agents and correspondents within Tonga and abroad and,
with the approval of His Majesty in Council, establish offices abroad.
Section 6 CAP. 102 National Reserve Bank of Tonga Act
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PART III. - CAPITAL, RESERVES AND PROFITS
6 Capital.
(1) The authorized capital of the Bank shall be $2,000,000.
(2) Half of the authorised capital shall be paid up as provided for in section
36(2). The balance of authorised capital may be paid up from time to time
by His Majesty's Government either in cash or by transfer from the
General Reserve established under section 7 if His Majesty in Council
so elects.
(3) All capital stock shall be wholly owned by His Majesty's Government,
shall not be transferable or subject to encumbrance and shall not be
reduced except by an amendment to this Act.
7 General Reserve.
The Bank shall establish a General Reserve to which shall be allocated at the end
of each financial year of the Bank such sums as shall be specified pursuant to
section 8.
8 Profits.
(1) The net profits of the Bank for any financial year, after meeting all current
expenditure for that year and after making provision for bad and doubtful
debts, depreciation in assets and any other purposes deemed necessary by
the Board shall be dealt with as follows:
(a) such amounts as the Board, with the approval of the Minister,
determines shall be allocated to the General Reserve established
under section 7; and
(b) the remainder shall be paid to the general revenue of the Kingdom
as soon as practicable after the end of the financial year.
(2) No payment shall be made under subsection l(b) if it appears to the Board,
following consultation with the auditors appointed under section 53(1)
that the assets of the Bank are, or after the payment would be, less than
the sum of its liabilities including paid up capital.
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PART IV. - BOARD, MANAGEMENT AND EMPLOYEES
9 Board, its powers and responsibilities
There shall be a Board of Directors of the Bank composed in accordance with
section 10 which shall be responsible for its policy and affairs and which may
issue directives for the purpose of giving effect to the provisions of this Act.
10 Membership of the Board.
The Board shall consist of:
(a) the Governor; and
(b) six other directors —
(i) to be appointed from time to time by His Majesty in Council;
(ii) to hold office during the pleasure of His Majesty in Council,
and who may from time to time be reappointed:
Provided that no such director shall hold office continuously
for more than 5 years without reappointment.
11 Appointment of Chairman, Deputy Chairman and Governor.
(1) His Majesty in Council shall appoint from among the Directors, a
Chairman and Deputy Chairman.
(2) The Governor shall be a person of recognised experience in financial and
banking matters, and shall be appointed by His Majesty in Council for a
period of not less than 3 or more than 5 years and shall be eligible for re-
appointment. He shall preside at meetings of the Board in the absence of
the Chairman and the Deputy Chairman.
(3) The remuneration and other terms and conditions of employment of the
Governor shall be as determined from time to time by His Majesty in
Council.
12 Remuneration of directors.
All directors shall be paid such remuneration in respect of their services as may
be determined by His Majesty in Council.
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13 Resignation and Disqualification.
(1) A director may resign his office on giving notice in writing to the Privy
Council through the Minister.
(2) No person shall be appointed or remain a director —
(a) who becomes or has anywhere been declared bankrupt and has not
been discharged, or against whom an order has been made in any
Court to pay a specific sum of money and who fails to do so
without leave of the court;
(b) who has anywhere been convicted of an offence involving
dishonesty;
(c) who has, in the case of a person having professional qualifications,
been disqualified or suspended from practising his profession by the
order of any competent authority made in respect of him personally;
(d) if Privy Council, following consultation with the Governor, decides
that he is incapable of carrying out, or is guilty of serious
misconduct in the performance of, the duties of his office.
14 Appointment to fill a vacancy.
If a director dies or resigns or otherwise vacates his office before the expiry of
the term for which he has been appointed, another person shall be appointed in
accordance with section l0 at the earliest opportunity, and in any event within 30
days, to fill the vacancy and shall hold office until the date when the
appointment of the person in whose place he was appointed would have expired.
15 Duties of the Governor.
(1) The Governor shall —
(a) serve as Chief Executive Officer of the Bank responsible to the
Board for the execution of its policy and the management of the
Bank;
(b) except as may otherwise be provided in this Act, the regulations of
the Bank or the resolutions of the Board, have the power to act,
contract, sign instruments and documents on behalf of the Bank
and, pursuant to the resolutions of the Board, delegate any of these
powers to the Deputy Governor or to other officers of the Bank.
(2) The Governor shall devote the whole of his professional services to the
Bank and shall not, without the approval of His Majesty in Council,
occupy or hold any other office or employment, whether remunerated or
not, except as nominee of the Bank except that he may —
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(a) act as a member of any statutory board, committee or commission
established by His Majesty's Government;
(b) become a governor, director or member of the board of any
international financial institution of which the Kingdom of Tonga is
a member.
(3) In the event of the absence or incapacity of the Governor from whatever
cause arising, the Deputy Governor appointed in accordance with section
17 shall act as Governor and shall have and may exercise all the powers
and functions of the Governor in accordance with subsection (1), and shall
be deemed to be a director.
(4) In the event of both the Governor and the Deputy Governor being unable
for any reason to carry out their duties, His Majesty in Council may
appoint another director, an officer of the Bank or any other person who is
qualified for appointment as a director under this Act, to act as Governor
for the time being; and any person so appointed shall, so long as his
appointment continues, have all the powers and functions of the Governor.
(5) Any person, other than a director, who is appointed under this section to
act as the Governor shall while so acting be deemed to be a director.
16 Meetings of the Board.
(1) The Board shall meet as often as the business of the Bank may require but
not less frequently than once every 2 months.
(2) Meetings of the Board shall be convened and notice given in accordance
with regulations to be made, and in addition the Chairman shall convene a
special meeting of the Board whenever in his judgment, he deems it
necessary.
(3) The Chairman or in his absence the Acting Chairman shall preside at all
meetings of the Board.
(4) Four directors of whom one shall be the Governor or Acting Governor,
shall form a quorum at any meeting and unless otherwise provided in this
Act, decisions shall be adopted by a simple majority of the votes of the
directors present except that in the event of an equality of votes, the
person presiding shall have and exercise a second or casting vote.
(5) No act or proceeding of the Board shall be invalidated merely by reason
of the existence of a vacancy or vacancies among the directors.
(6) All acts done by a person acting in good faith as a director shall be as
valid as if he were a director notwithstanding that some defect in his
appointment or qualification be discovered.
Section 17 CAP. 102 National Reserve Bank of Tonga Act
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17 Power to appoint Deputy Governor, officers and employees.
The Board may appoint and employ, at such remuneration and on such terms
and conditions as it may determine, an officer of the Bank to be Deputy
Governor and such other officers and employees as the Board considers
necessary for the efficient functioning of the Bank.
18 Conflicts of interest.
(1) No director shall act as a delegate of any agricultural, commercial,
financial, industrial, professional or other interest, or receive or accept
directions therefrom in respect of duties to be performed under this Act or
by virtue of such capacity under any other Act.
(2) All directors shall fully disclose to the Board any agricultural,
commercial, financial, industrial, professional or other interests with
which they may at any time be directly or indirectly connected and shall
refrain from voting on any matter related thereto which becomes the
subject of Board action:
Provided that such an interest, if so disclosed, shall not disqualify the
interested party for the purpose of constituting a quorum.
(3) No director nor any officer or employee of the Bank shall accept any gift
or advantage for himself or, in his behalf, for persons with whom he may
have family, business, or financial connections if the acceptance thereof
would result, or give the appearance of resulting, in a diminution of his
impartial devotion to his duties under this Act.
19 Secrecy.
(1) Except for the purpose of the performance of his duties or the exercise of
his functions or when lawfully required to do so by any court or under the
provisions of any written law, no director, officer or employee of the
Bank, or auditor appointed under section 53, shall disclose to any person
any material information relating to the affairs of the Bank or of any
financial institution or other person which he has acquired in the
performance of his duties under this Act.
(2) Any person contravening the provisions of this sub-section (1) shall be
guilty of an offence and liable on conviction to a fine not exceeding
$2,000 or imprisonment for any period not exceeding 2 years or to both.
(3) Any person unlawfully using inside knowledge for his own benefit or the
benefit of any other person shall be liable on conviction to a fine not
exceeding $5,000 or to imprisonment for any period not exceeding 4 years
or to both.
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20 Personal immunity of directors, officers and employees.
No director, officer or employee of the Bank or any person acting under
direction of the Bank shall be personally liable for an act or default of the Bank
done or omitted to be done in good faith and without negligence in the course of
the operations of the Bank.
PART V. - CURRENCY
21 Monetary unit.
(1) The monetary unit of Tonga is the pa'anga, divided into 100 seniti.
(2) The monetary unit may also, for all purposes, be expressed by the
symbol “$”.
22 Sole right to issue currency.
The Bank shall have the sole right of issuing currency in the Kingdom and no
other person shall issue currency or any documents or tokens payable to bearer
on demand having the appearance of or purporting to be currency.
23 Defacement of notes.
(1) No person shall, without the authority of the Bank, deface any currency
note by means of any writing, printing, stamp, mark or erasure.
(2) Any person contravening the provisions of this section shall be guilty of
an offence and liable on conviction to a fine not exceeding S200.
24 Legal tender.
(1) Currency issued by the Bank or deemed to have been issued by the Bank
by virtue of section 36(1)(a) of this Act shall be legal tender in Tonga —
(a) in the case of notes, for the payment of any amount;
(b) in the case of coins, if the coins have not been tampered with —
(i) in the case of coins of denominations in excess of $1 for the
payment of any amount;
(ii) in the case of coins of denominations of $1 or less, for
payment of an amount not exceeding 50 times their
face value.
Section 25 CAP. 102 National Reserve Bank of Tonga Act
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(2) For the purposes of this Act, a coin shall be deemed to have been
tampered with if it has been impaired, diminished or lightened (other than
by fair wear and tear) or has been defaced, whether or not the coin has
thereby been diminished or lightened.
25 Manufacture and characteristics of currency.
(1) In accordance with Clause 45 of the Constitution His Majesty, with the
advice of his Cabinet, shall determine the denominations, composition,
form, design, content and material of the Tonga currency, and may make
regulations with regard thereto.
(2) The Bank shall arrange for the minting of coins and the printing of
currency notes and for all matters relating thereto, and for the security and
safekeeping of unissued currency and for the custody, disposal and
destruction, as necessary, of plates, dies and retired currency.
(3) Currency notes issued by the Bank shall, subject to subsection (1), bear
the signatures of the Prime Minister of Tonga and the Minister or such
other person as may be approved by His Majesty with the advice of
his Cabinet.
(4) The characteristics of currency to be issued by the Bank shall be published
in the Gazette.
26 Power of recall.
Notwithstanding the provisions of section 24, His Majesty, with the advice of
His Cabinet, shall have power, on giving notice in the Gazette and in at least one
newspaper published and in general circulation in the Kingdom, to call in, for
the purpose of withdrawing from circulation, any currency issued or deemed to
have been issued by the Bank on payment of the face value thereof, and any
such currency so recalled shall, on the expiration of the time limit specified in
the notice, cease to be legal tender:
Provided that the holders of any such currency shall be entitled at any time to
claim payment from the Bank of the face value thereof.
27 Issue, withdrawal and exchange of currency.
The Bank shall issue, reissue and exchange on demand and without charge
currency which it has issued or which is deemed to have been issued by it:
Provided that —
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(a) in the event of the unavailability of a requested denomination the
Bank may deliver currency of available denominations which most
nearly approximate those requested;
(b) a charge may be made for the issue or reissue of any particular
currency specified by notice made under section 53(2).
28 Recovery of lost, stolen mutilated or otherwise damaged currency.
(1) No person shall be entitled to recover from the Bank the value of any lost
or stolen currency, except under the terms of any waiver expressly
executed in respect of the assumption by the Bank of risks incidental to
shipments of currency.
(2) The conditions under which mutilated or otherwise damaged currency
may be exchanged or refunded at partial or face value shall be determined
by the Bank.
29 Counterfeit currency.
The Bank shall assist in the enforcement of any law related to the counterfeiting
of currency in Tonga and certification by a duly authorised officer of the Bank
that an item in question is or is not genuine shall be prima facie evidence of the
fact in any legal proceeding in Tonga.
PART VI. - EXTERNAL RESERVE, FOREIGN EXCHANGE
OPERATIONS AND REVALUATION RESERVE ACCOUNT.
30 External Reserve.
The Bank shall maintain, within the limits of its powers, an External Reserve at
a level which the Bank considers adequate, consisting of all or any of the
following on such terms and conditions as the Board may determine —
(a) gold;
(b) foreign exchange in the form of currency or bank balances held
abroad;
(c) any internationally recognized reserve asset;
(d) bills of exchange and promissory notes denominated in foreign
currency and payable at any place outside the Kingdom;
(e) treasury bills issued by foreign governments specified from time to
time by the Board;
Section 31 CAP. 102 National Reserve Bank of Tonga Act
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(f) securities issued or guaranteed by foreign governments,
supranational organisations, international financial institutions or
any foreign public, municipal or local authority specified from time
to time by the Board;
(g) such other external assets as the Board, with the approval of His
Majesty in Council, shall specify.
31 Value of External Reserve.
If the External Reserve has declined or, in the opinion of the Bank, appears to be
in danger of declining to such extent as to jeopardize its adequacy, the Bank
shall submit to His Majesty in Council a report on the reserve position and the
causes which have led or may lead to such a decline together with
recommendations concerning the measures that it considers necessary to
forestall or otherwise remedy the situation.
32 Operations in foreign exchange and precious metals.
The Bank may, whether in Tonga or elsewhere —
(a) buy, sell, borrow or otherwise deal in foreign exchange, gold, silver
or other precious metals;
(b) buy, sell or deal in treasury bills and other securities issued or
guaranteed by foreign governments, supranational organisations,
international financial institutions or any foreign public, municipal
or local authority specified from time to time by the Board;
(c) open and maintain accounts with, and place deposits with, central
banks and other banks and financial institutions abroad;
(d) open and maintain accounts for, accept deposits from, and act as
agent or correspondent for, any person approved by the Board.
(e) establish foreign credits and give guarantees.
33 Revaluation Reserve Account.
(1) The gains or losses arising from any change in the valuation of the Bank's
assets or liabilities in, or denominated in, gold or foreign currencies or any
internationally recognized reserve asset as a result of alterations of the
exchange rate of the currency of Tonga, or of any change in the values of
those assets or liabilities with respect to the currency of Tonga, shall be
credited or debited to a Revaluation Reserve Account and neither profit
nor loss arising from any such change shall be included in the
computation of the annual profit or loss of the Bank.
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(2) Any loss arising from any such change referred to in subsection (1) shall
be set off against any credit balance in the Revaluation Reserve Account
and, notwithstanding any other provision of this Act, if such balance is
insufficient to cover that loss, His Majesty in Council shall cause to be
transferred to the ownership of the Bank non-negotiable non-interest
bearing securities issued by the Government to the extent of any
deficiency.
(3) Any credit balance in the Revaluation Reserve Account at the end of each
financial year of the Bank shall be applied, on behalf of the Government,
to the redemption of all securities issued and outstanding under subsection
(2) of this section; one fifth of the remaining balance shall be paid to
the Government:
Provided that —
(a) when the remaining balance does not exceed $100,000 it shall be
paid in full to the Government;
(b) His Majesty in Council may direct that the applications and
payments specified in this subsection shall be varied by such extent
as appears appropriate in the prevailing circumstances.
(4) No credit or debit shall be made to the Revaluation Reserve Account
except in accordance with the provisions of this section.
34 External value.
The external value of the pa'anga shall be determined from time to time in a
manner approved by His Majesty in Council and which has due regard to the
obligations which the Kingdom of Tonga has assumed in accordance with the
provisions of any international monetary agreement to which it is a party or to
which it has adhered.
35 Exchange rates.
(1) The Bank may determine the rate at which the Tongan currency may be
exchanged for the currency of any other country.
(2) Any person who exchanges any Tongan currency for the currency of any
other country, at a rate which he knows to be other than the rate
determined under subsection (1) shall be guilty of an offence and liable on
conviction to a fine not exceeding $2,000 or to imprisonment for a term
not exceeding 2 years or to both.
Section 36 CAP. 102 National Reserve Bank of Tonga Act
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PART VII. - TRANSFER OF ASSETS AND LIABILITIES
36 Transfer of Assets and Liabilities.
(1) On a day to be appointed by the Minister by notice in the Gazette,2 the
Bank shall take over the following —
(a) the assets of the Board of Commissioners of Currency established
under the Treasury Notes Act and the Coinage Act including (but
not limited to) the assets of the Note Security Fund, Treasury Note
Income Account, Coinage Security Fund and Coinage Income
Account established thereunder, and the Bank shall thereupon
assume all liabilities of the said Board of Commissioners of
Currency, Note Security Fund, Treasury Note Income Account,
Coinage Security Fund and Coinage Income Account, including
liability for notes and coin issued or deemed to have been issued
under the Treasury Notes Act and the Coinage Act and any such
notes and coin shall be deemed to have been issued by the Bank;
(b) all external financial assets held by or on behalf of His Majesty's
Government;
(c) the financial obligations of membership of the Kingdom of Tonga
in the International Monetary Fund.
(2) The net assets acquired by the Bank in terms of the last preceding
subsection shall be allocated firstly towards meeting His Majesty's
Government's liability to pay up an initial amount of $1,000,000 capital
stock in terms of section 6(2) of this Act; any excess of net assets
remaining shall be allocated to the General Reserve referred to in section
7 of this Act.
PART VIII. - RELATIONS WITH FINANCIAL INSTITUTIONS
37 Opening accounts for financial institutions.
The Bank may under such terms and conditions as the Board may determine —
(a) open accounts for, and accept deposits denominated in pa'anga or
any foreign currency from financial institutions doing business in
Tonga; and
2 1 July 1989, vide G. 109/89.
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(b) open accounts with, and place deposits denominated in pa'anga or
any foreign currency with, financial institutions doing business
in Tonga.
38 Operations with account holders.
The Bank may —
(a) effect remittances of money;
(b) buy from, sell to, discount and rediscount for, holders of accounts
with it bills of exchange and promissory notes;
(c) for its own account issue, sell or place bonds, certificates, notes and
similar instruments and purchase such instruments:
Provided that these operations need not be limited to account
holders only;
(d) lend money to holders of accounts with it on such terms and
conditions, and against the security of assets which the Bank is
authorised by this Act to buy, as may be specified by the Board.
39 Required reserves of financial institutions.
(1) The Bank may with the approval of His Majesty in Council, by written
notice to the principal place of business in Tonga of each financial
institution and by publication in the Gazette, specify the reserves required
to be maintained by way of cash holdings or deposits with the Bank or by
both in such proportions as the Bank may specify. The reserves shall be
the same for all financial institutions of the same class and shall not
exceed 25 per cent of deposit and other similar liabilities which may be
specified by the Bank.
(2) The Bank may pay interest on all or part of the reserves specified under
subsection (1).
(3) The Bank may specify different reserve ratios for different classes of
liabilities, and may specify the method of their computation.
(4) The initial specification of reserves required under subsection (1), or any
increase thereof, shall be effective only after at least 30 days notice
thereof has been given and shall not relate to a period prior to the date of
notice.
(5) The Bank may impose on any financial institution which fails to maintain
the reserves specified under subsection (1) an interest charge not
exceeding one tenth of one percent of the amount of the deficiency in such
reserves for every day on which the deficiency continues.
Section 40 CAP. 102 National Reserve Bank of Tonga Act
1988 Revised Edition Page 22
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40 Regulation of interest and credit.
(1) The Bank may, with the approval of His Majesty in Council, specify by
publication in the Gazette and by written notice to the principal place of
business in Tonga of each financial institution —
(a) the maximum or minimum, or maximum and minimum rates of
interest payable in respect of deposit and other similar liabilities
and the method of computation thereof;
(b) the permissible purposes, aggregate ceilings, maximum amounts
beyond which the approval of the Bank is necessary, the maximum
maturities, and maximum and/or minimum rates of interest
chargeable in respect of —
(i) the making of advances, whether by loans or overdrafts, and
investments;
(ii) the discounting of bills of exchange, promissory notes and
other commercial or financial paper;
(iii) the issuing of letters of credit;
(iv) the granting of acceptances and other forms of credit;
(c) the minimum cash margin or security required in respect of the
items enumerated in paragraph (b):
Provided that any increase in such cash margin or security shall only be
effective after at least 30 days notice thereof has been given and shall not
relate to a period prior to the initial date of notice.
(2) The specifications made under subsection (1) shall be the same for all
financial institutions of the same class.
(3) With the approval of His Majesty in Council, the provisions of subsection
(1) may be made applicable by the Bank, by publication in the Gazette
and by written notice, to any person having as a principal object of his
business the extension of credit.
(4) The Bank shall have authority to examine the accounts, books, and papers
of any person who it has reason to suspect is extending or has extended
credit in violation of subsection (3) and the refusal to submit those
accounts, books and papers shall be prima facie evidence of a violation.
(5) Any financial institution which fails to comply with a requirement of
subsection (1) may, for each violation and at the option of the Bank, be
required to pay a charge not exceeding $2,000 to the Bank; and upon
being so required in writing the said sum shall be a civil debt and if not
paid may be enforced by action in the Supreme Court.
(6) Any person to whom the provisions of subsection (1) has been made
applicable pursuant to subsection (3) shall be guilty of an offence if —
National Reserve Bank of Tonga Act CAP. 102 Section 41
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(a) that person is in breach of this section; or
(b) that person supplies false information or fails to furnish, within a
specified time, any information required by the Bank to satisfy it
that that person is complying with this section.
(7) Any person guilty of an offence under subsection (6) shall be liable on
conviction —
(a) in respect of an offence under paragraph (a) thereof to a fine not
exceeding $2,000; or
(b) in respect of an offence under paragraph (b) thereof to a fine not
exceeding $200 for every day during which the offence continues.
41 Foreign Exchange Positions
The Bank, with the approval of His Majesty in Council, may determine
(a) the maximum amount of the balances which financial institutions
may hold in foreign currencies generally or in any specified foreign
currency; and
(b) the maximum amount of indebtedness in foreign currencies
generally or in any specified foreign currency which financial
institutions may incur.
42 Minimum holdings of unimpaired liquid assets.
(1) The Bank may from time to time, with the approval of His Majesty in
Council, by notice in writing to each financial institution and by
publication in the Gazette, specify the minimum holdings of unimpaired
liquid assets that financial institutions must maintain in relation to their
operations in Tonga. The minimum shall be the same for all financial
institutions of the same class and shall not exceed 35 per cent of deposit
and other similar liabilities.
(2) The Bank shall determine the composition and the method of computing
the amounts of unimpaired liquid assets to be held by financial
institutions.
(3) Any financial institution which fails to comply, within such reasonable
time as the Bank may fix, with any requirement of subsection (1) shall be
liable to pay, on being called upon to do so by the Bank, an interest charge
not exceeding one tenth of one per cent of the amount of the deficiency
for every day on which the deficiency continues.
Section 43 CAP. 102 National Reserve Bank of Tonga Act
1988 Revised Edition Page 24
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43 Local assets ratio.
A financial institution shall maintain assets consisting of such claims payable in
the currency of Tonga and other assets situated in the Kingdom in such
minimum proportion of its deposits and other similar liabilities payable in the
Kingdom as the Bank with the approval of His Majesty in Council may specify.
PART IX.-SUPPLY OF INFORMATION
44 Supply of Information.
(1) A financial institution shall furnish to the Bank such information
regarding its business, or that of any related company in Tonga or
elsewhere, as the Bank may require for the purposes of this Act.
(2) The Bank may require a certificate from the auditor of the financial
institution verifying the accuracy of any information furnished under
subsection (1).
(3) Every director and every manager of a financial institution which fails to
provide the required information or a certificate from its auditor after a
reasonable period of notice shall be guilty of an offence and shall be liable
on conviction to a fine not exceeding $500 for every day during which the
offence continues.
(4) If information provided under this section is false in any material
particular, every director and every manager of the financial institution
shall be guilty of an offence and shall be liable on conviction to a fine not
exceeding $5,000, or to imprisonment for any period not exceeding 2
years or to both.
(5) Any person who is prosecuted in respect of any offence under this section
shall have a good defence if he proves that the offence was committed
without his consent or connivance and that he exercised all such diligence
to prevent the commission of the offence as he ought to have exercised
having regard to his position in the financial institution in respect of which
the offence was committed.
(6) In subsection (1), “related company” means any body corporate which is
or has at any relevant time been the financial institution's subsidiary or
holding company or a subsidiary of its holding company or a holding
company of its subsidiary.
National Reserve Bank of Tonga Act CAP. 102 Section 45
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45 Extension of time limit for provision of documents and information.
At the request of a financial institution the Bank may extend any period within
which the financial institution is, in accordance with the provisions of this Act,
obliged to furnish any document or information.
PART X. - RELATIONS WITH AND FOR THE
GOVERNMENT
46 Bank to be principal banker, fiscal agent and depository for the
Government.
(1) The Bank shall be the principal banker, fiscal agent and depository for the
Government; and may act in such capacities for any statutory corporation.
(2) The Minister may request the Bank to render advice on the borrowing
program of the government, to assist in specific borrowing negotiations,
and to advise and furnish reports on matters relating to the purposes of the
Bank.
(3) It shall be the duty of the Bank to inform and advise the Minister about
any matter which in the opinion of the Bank is likely to affect the
achievement of its purposes.
(4) It shall be the duty of the Bank to provide advisory services to the
Minister on banking, monetary and external reserve matters, and to
provide statistics pertaining thereto.
47 Agent for the administration of Acts relating to banking and
exchange control.
The Bank shall exercise, as agent for His Majesty's Government, such powers or
functions under any law relating to exchange control and the regulation of
financial institutions as may be delegated to it.
48 Advances to Government and Statutory Corporations. (Cap. 109)
(1) Subject to the provisions of the General Loan & Stock Act —
(a) the Bank is expressly authorised to grant temporary advances to His
Majesty's Government for budgetary purposes on such terms and
conditions as may be agreed between them and approved by His
Majesty in Council; and
Section 49 CAP. 102 National Reserve Bank of Tonga Act
1988 Revised Edition Page 26
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(b) the Bank may make advances to statutory corporations on such
terms and conditions and against such security as may be agreed
between them, and approved by His Majesty in Council.
(2) The Bank shall be consulted by the Ministry of Finance on the occasion of
the preparation of the Government's budget with a view to reaching an
understanding on the total amount of credit that may be expected to be
extended by the Bank to the Government during the following financial
year.
(3) The Bank is expressly authorized to make advances to the Government,
on such terms and conditions as may be agreed between them, in respect
of subscriptions and other payments resulting from, or incidental to, the
membership of the Kingdom of Tonga in any international financial
institution, the participation of Tonga in any account thereof or any
transactions and operations undertaken in connection therewith.
(4) The Bank shall be informed by the Ministry of Finance, other government
institutions, agencies and statutory corporations at any time that either
domestic or foreign credit operations are contemplated; in the event that,
in the opinion of the Board, such operations individually or collectively
appear to be of a magnitude inappropriate to prevailing economic
conditions, the Bank shall submit to His Majesty in Council a report
drawing attention to the situation and recommending measures to rectify
the situation.
49 Acquisition of Government securities etc.
The Bank may buy, sell or deal in notes, bills, stocks, securities or other
evidence of indebtedness issued or guaranteed by His Majesty's Government,
which were publicly offered for sale or form part of an issue which is being
made to the public at the time of acquisition by the Bank and which mature in
not more than 15 years.
50 Policy directives.
His Majesty in Council may issue to the Bank such written directives of a
general nature as may be necessary to give effect to the economic policies of the
Government, and the Bank shall comply therewith.
51 Depository and fiscal agency of international financial institutions
and supranational organizations.
(1) Notwithstanding the provisions of section 6(4) of the Bretton Woods
Agreements Act, the Bank shall from the day appointed under section 36,
serve as the fiscal agency of Tonga for the purposes of the International
National Reserve Bank of Tonga Act CAP. 102 Section 52
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Monetary Fund and as depository in Tonga for all the fund's holdings of
its currency.
(2) The Bank may be designated as the depository of or the fiscal agency or
institution through which dealings shall be conducted with other
international financial institutions and supranational organisations of
which the Kingdom of Tonga is a member.
PART XI. - ACCOUNTS AND STATEMENTS
52 Financial year.
The financial year of the Bank shall coincide with the financial year of His
Majesty's Government.
53 Accounts.
(1) The accounts of the Bank shall be audited by auditors appointed annually
by His Majesty in Council.
(2) In its accounts, the Bank shall not be required to include the face value of
any particular currency on issue that His Majesty in Council has specified
by notice in the Gazette.
(3) Notwithstanding the provisions of subsection (1) His Majesty in Council
may at any time require the Auditor General to examine and report on the
accounts of the Bank or on any aspects of its operations, and the Bank
shall facilitate such examination.
54 Publication of accounts and annual report and monthly return.
(1) The Bank shall, within 3 months after the close of each financial year, or
such extended period as His Majesty in Council may permit, transmit to
the Minister —
(a) a copy of the annual accounts certified by the auditors; and
(b) a report of its operations during that year.
(2) The Bank shall cause a copy of the annual accounts to be published in the
Gazette.
(3) The Minister shall cause a copy of the annual accounts and the report of
operations to be submitted to His Majesty in Council and thereafter to be
laid before the Legislative Assembly at the first available opportunity.
Section 55 CAP. 102 National Reserve Bank of Tonga Act
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(4) The Bank shall, as soon as may be after the last weekly balance day of
each month, make up a return of its assets and liabilities as at the close of
business on that day and send a copy of the return to the Minister and
publish the return in the Gazette.
PART XII. - GENERAL
55 Exemption from taxes and duties.
The Bank shall be exempt from all Government taxes and duties on its profits,
purchases, operations, capital, property transactions and documents.
56 Bank of Tonga and Tonga Development Bank.
Notwithstanding any provision to the contrary in any other law, the provisions of
this Act relating to a financial institution shall apply to;
(a) the Bank of Tonga established under the Bank of Tonga Act;
(b) the Tonga Development Bank established under the Tonga
Development Bank Act.
57 Prohibited activities.
The Bank shall not, without the specific approval of His Majesty in Council,
engage in trade, purchase the shares of any corporation or company, including
the shares of any banking company or otherwise have an ownership interest in
any commercial, agricultural, industrial, or other undertaking except such
interest as the Bank may acquire in the course of satisfaction of debts due to it:
Provided that all such interest acquired in the course of satisfaction of debts due
to the Bank shall be disposed of at the earliest suitable opportunity.
58 Prohibited names.
Save with the written consent of His Majesty in Council, no financial institution
shall hereafter be authorized to do banking business in the Kingdom by a name
which includes any of the words “Central”, “Kingdom”, “National”, “Reserve”,
“Royal”, “State”, “Tonga”, or their equivalent in any other language.
National Reserve Bank of Tonga Act CAP. 102 Section 59
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59 Bank holidays.
(1) If the Bank considers it necessary or expedient in the public interest, it
may by order declare any day a non-business day for financial institutions.
(2) Without prejudice to subsection (1), the Bank may in the event of cyclone,
earthquake or other natural disaster declare in such manner as it considers
appropriate any day a non-business day for financial institutions, which
declaration may relate to any part of or to the whole of the Kingdom.
(3) No financial institution shall transact any banking business with the public
on any day declared to be a non-business day.
(4) Any day declared to be a non-business day under this section shall not
necessarily be a public holiday, except for the purposes of the Bills of
Exchange Act, and nothing in this section shall be deemed to affect the
provisions of the Public Holidays Act. (Cap. 51.)
60 Responsibility and communication.
The subject matter of this Act is within the sphere of responsibility of the
Minister, who shall serve as the channel of communication between His Majesty
in Council and the Bank.
61 Regulations.
His Majesty in Council may make regulations, not inconsistent with this Act,
generally for giving effect to this Act or for the conduct of the business of
the Bank.
PART XIII. - REPEAL
62 Repeal and Saving.
(1) The following enactments are hereby repealed:
(a) The Treasury Notes Act;
(b) the Coinage Act;
(c) the Decimal Currency Act; and
(d) the Investment Fund Act.
(2) Section 13 of the Contract Act shall not apply to the Bank or to any
financial institution or to any person to whom section 40 applies.
Section 63 CAP. 102 National Reserve Bank of Tonga Act
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(3) Notwithstanding the repeal under subsection (1), all subsidiary legislation
made thereunder and in force at the time of coming into force of this Act
shall be deemed to have been made under this Act and shall continue in
force until other subsidiary legislation shall be made by virtue of this Act.
63 Application of other laws.
Notwithstanding any other law to the contrary, the provisions of the General
Loan and Stock Act shall not apply to the Bank.
