18.Cash and balances with the central bank

Obligatory reserve

During the course of the working day, the Bank may use funds from the obligatory reserve accounts for ongoing payments, on the basis of an instruction submitted to the Central Bank of Poland (NBP). However, the Bank must ensure that the average monthly balance on this account complies with the requirements set in the obligatory reserve declaration.

Funds on the obligatory reserve account bear interest of 0.9 of the reference rate. As at 31 December 2015, this interest rate was 1.35% and as at 31 December 2014 amounted to 1.8%.

Restricted cash:

Cash in the amount of PLN 15 909 thousand including PLN 5 792 thousand constituting a currency SWAP collateral in KREDOBANK and PLN 10 117 thousand (PLN 11 440 thousand as at 31 December 2014) pledged as collateral for securities' transactions conducted by the Brokerage House of PKO Bank Polski SA are deposited in the Central Securities Depository of Poland (KDPW_CCP), as part of the Guarantee Fund for the Settlement of Stock Exchange Transactions. Each direct participant who holds the status of settlement-making participant is obliged to make payments to the settlement fund which guarantees a proper settlement of the stock exchange transactions covered by that fund. The amount of the payments depends on the value of transactions made by each participant and is updated by KDPW_CCP on a daily basis.

In the statement of cash flows, these cash are presented as restricted cash.

Cash and cash equivalents

The amount on the current account in the Central Bank, cash and other are entirely treated as cash and cash equivalents for the purposes of the statement of cash flows.