Credit Operations
In case of liquidity needs, the Central Bank of Montenegro may grant liquidity loan to credit institutions in the form of:
- Intraday liquidity loan,
- Overnight liquidity loan, and
- Emergency liquidity assistance loan.
The Central Bank of Montenegro may grant a liquidity loan provided that the credit institution is solvent and that loan is secured by securities issued by the State of Montenegro, EU Members States and international financial institutions - by transferring ownership right over those securities to the Central Bank through a repurchase transaction (transaction of the sale of these securities with repurchase obligation) or by constituting a lien on those securities to the benefit of the Central Bank or emergency liquidity assistance loan with other collateral that the Central Bank deems appropriate, other than immovable property.
The nominal value of securities issued by the State of Montenegro, EU Members States and international financial institutions i.e. the market value of other collateral offered shall be no less than 115% of the loan value. When the Central Bank assesses that the value of collateral for emergency liquidity assistance loan is not sufficient to secure receivables on that loan, a credit institution shall, at the request of the Central Bank, provide additional collateral.
The Central Bank may grant an intraday liquidity loan to a credit institution if the credit institution is lacking funds in its account to meet all its due liabilities during a working day. A credit institution may use the intraday liquidity loan provided it has used 50% of its allocated reserve requirements for maintaining daily liquidity.
The Central Bank shall charge interest on the granted intraday liquidity loan at an interest rate equal to the weighted average effective lending interest rate (WAELIR) on loans granted by credit institutions, calculated on the last day of the month preceding the month in which the loan is being granted, increased by 0.5 percentage point.
The credit institution shall repay the intraday liquidity loan to the Central Bank on the same working day, no later than by the expiry of time envisaged for the exchange of payment transaction messages in accordance with the RTGS Daily Operating Schedule. If the credit institution fails to repay the intraday liquidity loan by the expiry of time envisaged, the Central Bank shall grant the overnight liquidity loan to the credit institution, without the credit institution`s application, in the amount of the outstanding portion of the intraday liquidity loan.
If a credit institution does not have sufficient funds in the account to settle all its due liabilities at the end of the time envisaged for the exchange of payment transaction messages, the Central Bank may grant an overnight liquidity loan to the credit institution. The credit institution may use an overnight liquidity loan provided that it has used 50% of its allocated reserve requirements for maintaining daily liquidity.
The Central Bank shall charge interest on the granted overnight liquidity loan at an interest rate equal to the weighted average effective lending interest rate (WAELIR) on loans approved by credit institutions, calculated on the last day of the month preceding the month in which the loan is being granted, increased by 1 percentage point.
The credit institution shall repay the overnight liquidity loan and the corresponding interest to the Central Bank until 12:00 hours on the following working day. If the credit institution fails to repay the overnight liquidity loan within the specified deadline, the Central Bank shall charge the interest at the rate equal to the statutory default interest rate for the period beginning from the maturity date until the collection of this loan.
The Central Bank may grant an emergency liquidity assistance loan to a credit institution experiencing short-term difficulties in maintaining liquidity. The Central Bank may grant the emergency liquidity assistance loan to a credit institution for the period up to180 days. The credit institution shall repay the emergency liquidity assistance loan by the expiry of the time envisaged for the exchange of payment transaction messages in accordance with the RTGS Daily Operating Schedule on the deadline date.
The Central Bank of Montenegro may sign only once the agreement on the renewal of the emergency liquidity assistance loan for an additional period of no more than 180 days with the credit institution that has previously adopted the programme of measures for resolving liquidity shortfall problems and which is deemed acceptable by the Central Bank.
The CBCG shall charge interest on the granted emergency liquidity assistance loan at an interest rate equal to the weighted average effective lending interest rate (WAELIR) on loans approved by credit institutions, calculated on the last day of the month preceding the month in which the loan is being granted, increased by 1.5 percentage points.
If the credit institution fails to repay the emergency liquidity assistance loan within the agreed deadline, the Central Bank shall charge the credit institution interest at a rate equal to the statutory default rate, until the collection of this loan.
Decision on Detailed Conditions for and the Manner of Granting Loans to Credit Institutions in Case of Their Liquidity Needs (OGM 35/24).