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Chad’s Banking Regulations: A Guide to Compliance

In a country with a largely cash-based economy, understanding the banking regulations in Chad is crucial for businesses and individuals alike. In this article, we will delve into the methods of payment, banking systems, foreign exchange controls, and U.S. banks and local correspondent banks operating in Chad.

Methods of Payment

Chad’s economy relies heavily on cash transactions, making it essential to have alternative payment methods available. While credit cards and personal or company checks are not widely accepted, some hotels and restaurants now accept international credit card payments. Traditional financial instruments such as:

  • Letters of credit
  • Collections
  • Funds transfers

are also available within Chad or through foreign banks.

Banking Systems

Chad’s banking system is limited in size and services offered to the private sector. Financial instruments include:

  • Letters of credit
  • Short, medium, and long-term loans
  • Foreign exchange operations
  • Some long-term savings instruments

There are currently ten commercial banks operating in Chad, offering credit on market terms that average 16 to 25 percent for short-term loans.

Regulation

The banking sector is regulated by the Commission de Banque de l’Afrique Centrale (COBAC), a regional banking agency. Chad is a member of the:

  • CFA (Communauté Financière Africaine) zone
  • Central African Monetary Union (CEMAC)

which guarantees the convertibility of the Central African CFA Franc (FCFA) into Euro at a fixed rate.

Foreign Exchange Controls

There are no restrictions on transferring funds into Chad, but several restrictions apply to money departing the country. Individuals transferring more than $1,000 must provide documentation of the source and purpose of the transfer. Transactions exceeding:

  • $10,000 for individuals
  • $50,000 for companies

are automatically notified to the COBAC. Companies transferring more than $800,000 out of the country also require additional approvals.

U.S. Banks & Local Correspondent Banks

There are no U.S. banks currently operating in Chad, but several local banks have correspondent banks in the U.S. and Europe, facilitating international transfers. The following banks have Society for Worldwide Interbank Financial Telecommunication (SWIFT) identification codes and arrangements with correspondent banks:

  • Société Générale des Banques
  • Banque Commerciale du Chari
  • Ecobank Tchad
  • Orabank
  • Commercial Bank Tchad
  • Banque Agricole et Commerciale
  • Banque Sahelo Saharienne pour L’investissement et le Commerce (Tchad) S.A.
  • United Bank for Africa (UBA) Tchad

Recent Developments

New legislation restricting foreign exchange holdings and cash outflows was set to be implemented in 2019 but was delayed in 2020. Holding large sums of foreign currency in Chad raises risks of government appropriation through legal procedures.

Conclusion

Overall, understanding the banking regulations in Chad is crucial for businesses and individuals alike. By familiarizing yourself with the methods of payment, banking systems, foreign exchange controls, and U.S. banks and local correspondent banks operating in Chad, you can ensure compliance with the country’s regulations and maintain a smooth financial operation.