Mutual Banks Act, 1993 (Act No. 124 of 1993)

Regulations

Regulations relating to Mutual Banks

Chapter II : Risk-based Returns and Instructions, Directives and Interpretations relating to the completion thereof

15. Set-off

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(1) Where a client maintains both debit and credit balances with a mutual bank, it may be permissible in certain circumstances to set such balances off against one another for the purposes of completing the prescribed forms, thus reporting net balances only.

 

(2) Unless otherwise provided in these Regulations, set- off shall be allowed only if all of the following circumstances apply, namely—
(a) a legal right of set-off must exist and the reporting institution should have obtained a legal opinion to the effect that its right to apply set-off is legally well-founded and would be enforceable in the liquidation or bankruptcy of the client(s) or of the institution;
(b) the debit and credit balances must relate to the same person;
(c) both the debit and the credit balances must be denominated in the same currency; and
(d) the debit and credit balances must have identical maturities.

 

(3) No set-off shall be allowed in respect of balances relating to clients, other than foreign banks, outside the Republic, the self-governing territories and the independent states.