Financial instruments continued H. Determination of fair value

PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2014 AND 2013 Expressed in millions of Rupiah, unless otherwise stated Appendix 530 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

f. Transactions with Related Parties

The Bank and Subsidiaries enter into transactions with parties which are defined as related parties in accordance with Statement of Financial Accounting Standards SFAS No. 7 regarding “Related Party Disclosures” and Regulation of Financial Services Authority formerly Bapepam and LK No. KEP-347BL2012, dated 25 June 2012 regarding “Financial Statements Presentation and Disclosure of Issuers or Public Companies”, which are defined, among others, as: I. entities under the control of the Bank and Subsidiaries; II. associated companies; III. investors with an interest in the voting that gives them significant influence; IV. entities controlled by investors under Note III above; V. key employees and family members; and VI. entity that is controlled, jointly controlled or significantly influenced by Government, which is defined as the Minister of Finance or Provincial Government who has share ownership in the entity. All significant transactions with related parties have been disclosed in Note 55.

g. Cash and Cash Equivalents

Cash and cash equivalents consist of cash, current accounts with Bank Indonesia and current accounts with other banks and other short term highly liquid investments with original maturities of 3 three months or less.

h. Current Accounts with Bank Indonesia and Other Banks

Current accounts with Bank Indonesia and Other Banks are classified as loans and receivables. Refer to Note 2c for the accounting policy of loans and receivables. The Minimum Statutory Reserve Based on Bank Indonesia Regulation No.1019PBI2008 dated 14 October 2008 concerning Statutory Reserves of Commercial Banks in the Bank Indonesia in Rupiah and Foreign Currency, as amended by Bank Indonesia Regulation No. 1025PBI2008 dated 23 October 2008 as amended by Bank Indonesia Regulation No. 1219PBI2010 dated 4 October 2010 as amended by Bank Indonesia Regulation No. 1310PBI2011 dated 9 February 2011 which has been amended with PBI No. 1515PBI2013 dated 24 December 2013, the Bank should comply with a minimum reserve requirement GWM in Bank Indonesia in Rupiah and foreign currencies. Minimum reserve requirement in Rupiah consists of Primary GWM, Secondary GWM and Loan to Deposit Ratio GWM. Primary GWM in Rupiah is set at 8.00 from the Rupiah third party funds, secondary GWM in Rupiah is set at minimum 4.00 from the Rupiah third party funds and GWM LDR in Rupiah is calculated by the difference between lower disincentive parameter or higher disincentive parameter with the difference between Bank’s LDR and target LDR by taking into account the difference between Bank’s Capital Adequacy Ratio CAR and incentive CAR. Primary GWM and secondary GWM are applied effectively starting 1 November 2010 and GWM LDR is applied effectively starting 1 March 2011.