CUSTODIAL AND TRUST OPERATIONS Continued

PT BANK MANDIRI PERSERO AND SUBSIDIARIES Notes to the Consolidated Financial Statements Continued December 31, 2002 and 2001 Expressed in millions of Rupiah, unless otherwise stated - 133 -

57. RELATED PARTY TRANSACTIONS Continued

b. Significant transactions with the Government of the Republic of Indonesia • The Committee on Financial Sector Policy KKSK and the Minister of Finance approved and guaranteed the issuance of standby letters of credit and conversion of loans of PT Garuda Indonesia to Mandatory Convertible Bonds Notes 48 and 12B.g. • Government bonds held by the Bank amounting to Rp103,849,017 were reprofiled by the Government on November 20, 2002 Note 8. • The Bank paid Rp1,124,194 to the State Treasury representing 50 deposit in relation to an objection regarding the Bank’s 2000 corporate income tax assessment Notes 16 and 28c. • Return of additional paid-in capital of Rp129,685 Notes 8 and proposed return of Rp1,412,000 representing a portion of the excess of recapitalization Notes 33. c. Transfer of Certain Investments and Non-core Fixed Assets In 1999 certain investments in shares of stock and certain non-core fixed assets of Bank Mandiri were transferred to PT PIM and PT PHTM, related companies, respectively Notes 14 and 15. In 2002, the fixed assets of PHTM were transferred back to the Bank based on the shareholder’s resolution of PHTM dated June 14, 2002.

58. SIGNIFICANT AGREEMENTS, COMMITMENTS AND CONTINGENCIES

a. Management Contract On April 8, 2000, a Management Contract was signed between the Government and Bank Mandiri in connection with the recapitalization of Bank Mandiri as described in Note 3. The Management Contract provides for, among others, the requirements and milestones to be fulfilled by Bank Mandiri in accordance with its Business Plan for the period to end of 2001, which include, the following: 1. Obligations to be fulfilled by Bank Mandiri, among others: • To use the Government Bonds to settle liabilities only and not for use in acquiring assets, except for Government Bonds classified as trading based on prevailing regulations. • To reduce overhead costs. • To settle unreconciledopen items and reconcile inter-branch transactions derived from the Merged Banks. • To conduct special audit of high risk and material un-reconciled open items. • To implement an automated monitoring system over the use of funds and liquidity of Bank Mandiri. • To implement a policy of reporting according to Bank Indonesia regulations.