P.R. Laws tit. 7, § 112
Every bank or foreign bank shall always maintain a reserve which shall be called “legal reserve” which shall be established by the Commissioner through regulations, but in no case shall it exceed thirty percent (30%) of the total obligations of the bank or the foreign bank, payable on sight, except for the deposits of the Government of Puerto Rico, its municipalities, public corporations and instrumentalities of the Government of Puerto Rico or the Government of the United States secured by actual collateral. The legal reserve of a bank or a foreign bank shall be established taking into consideration its obligations payable on sight, except for the deposits of the Government of Puerto Rico, of the municipal governments, public corporations and instrumentalities of the Government of Puerto Rico or the Government of the United States secured by actual collateral. It is provided that until the Commissioner has adopted regulations on the legal reserve, said reserve shall not be less than twenty percent (20%) of its obligations payable on sight, except for the deposits of the Government of Puerto Rico, of the municipal governments, public corporations and instrumentalities of the Government of Puerto Rico or the Government of the United States secured by actual collateral.
The legal reserve shall be constituted of any of the following securities, or a combination thereof:
(1) Legal tender of the United States of America.
(2) Checks payable by banks or trust companies located in any part of the Commonwealth of Puerto Rico, to be presented for collection on the day after they are received.
(3) Money deposited in other banks or depository institutions subject to immediate collection.
(4) Federal funds loaned by the bank to any Federal Reserve Bank and transactions for the purchase of securities under agreement to resell by the bank, that are subject to the obligation to be repaid to the bank on or before the close of the following working day; and
(5) Those other assets which the Commissioner may determine from time to time.
The Commissioner may, at his/her discretion, increase the legal reserve established in this section or in the regulations adopted therefor, up to not more than thirty percent (30%) of the total obligations of the bank or the foreign bank, payable on sight, except for the deposits of the Government of Puerto Rico, its municipalities, public corporations and instrumentalities of the Government of Puerto Rico or the Government of the United States secured by actual collateral, when in his/her judgment the circumstances shall so require; but the order increasing the minimum legal reserve shall not be effective until thirty (30) days after it is entered.
When a bank is authorized to establish and does establish one or more branches in any state of the United States or in any foreign country where said branch or branches are subject to the reserve requirements called for by the legislation applicable to banking institutions established in said state or foreign country, the Commissioner shall render effective the legal reserve provision contained herein with regard to said branch or branches, provided it does not affect the public interest of the people of Puerto Rico.
The legal reserve requirements established herein shall be computed on the basis of the reserve average maintained for a week, and said computation shall be made on the Monday of each week. Every bank subject to the provisions of this section shall be bound to render to the Commissioner a report certified by a bank official duly authorized to do so, in which the daily computation of the legal reserve maintained by said bank and the legal reserve average maintained during each week shall be stated. The frequency of said report shall be determined from time to time by the Commissioner through an order or regulation. Provided, That until the Commissioner has issued an order or regulation to that effect, the report required in this section shall continue to be rendered on a weekly basis. The Commissioner is hereby authorized to levy and collect from each bank or foreign bank, an administrative fine for a maximum amount of one thousand dollars ($1,000) for each week said bank or foreign bank fails to maintain the minimum legal reserve required, or which may be required under this section. If the bank or foreign bank on which an administrative fine is levied under this paragraph fails to pay the same within the term of fifteen (15) days from the date of notice of the levying of said administrative fine, the Commissioner may, for the purpose of collecting said administrative fine, file a civil action in the Court of First Instance, San Juan Superior Court.
The Commissioner shall serve notice on any bank or foreign bank whose legal reserve is less than that required or which may be required under this section, of its duty to complete its full amount immediately and notify said official of that fact as soon as said amount is completed. Should said bank or foreign bank fail to complete the amount within a period of thirty (30) days, the same may be declared in liquidation by the Commissioner, provided it is a bank organized under §§ 1 et seq. of this title, and it shall be deemed by the Commissioner as a corporation under liquidation. Should it be a foreign bank, the Commissioner shall direct the cancellation of its license and the liquidation of its business in Puerto Rico.
History —May 12, 1933, No. 55, p. 322, § 16; June 3, 1948, No. 6, p. 16, § 1; Aug. 19, 1948, No. 4, p. 186, § 1; Sept. 7, 1961, No. 12, p. 353, § 1; June 21, 1962, No. 85; Aug. 28, 1997, No. 108, § 17.