29 Aug 2013 05:00
WINDHOEK, 29 AUG (NAMPA) - The limiting of foreign shareholding in local banking institutions is one of the proposed regulatory changes in the Banking Institutions Bill of 2013.
The Bank of Namibia (BoN)s Assistant Governor Michael Mukete said at a media conference held here on Wednesday that they are introducing mechanisms and regulatory changes to safeguard the soundness of the national banking system.
The BoN has proposed 55 per cent foreign ownership in local banks in the near future.
The Banking Institutions Act of 1998 - as amended - will be repealed to ensure that there is single legislation governing matters relating to banking institutions and their controlling companies.
In addition, the revision of the banking sector law is also motivated by the realisation that the banking sector has been and remains a critical factor not only for accelerating Namibias growth, but also for making it inclusive, he stressed.
The proposed Bill will deal with matters such as introducing limits on foreign shareholding in banking institutions; streamlining the definition of banking business in order to provide more clarity and to ensure the proper application thereof; introducing requirements for banking institutions to have recovery plans or living wills which will detail how to resolve a financial problem; and enhancing and improving the resolution provisions of the banking law when dealing with weak or distressed banking institutions.
The proposed Bill will also introduce a differentiated regulatory framework for micro-finance banking institutions, otherwise known as second-tier banks; and better refine the provisions relating to illegal financial schemes (such as pyramid schemes) so as to enhance the understanding of the public to detect illegal schemes.
According to Mukete, significant changes have taken place in the local and international arena since the global financial crisis, which warrant the review of the current legal framework and regulatory provisions.
Therefore, it is important for Namibia, like other countries, to introduce mechanisms and regulatory changes to safeguard the soundness of its national banking system.
In addition, the revision of the banking sector law is also motivated by the realisation that the sector has been and remains a critical factor not only for accelerating Namibias growth, but also for making it inclusive.
Mukete added that the proposed changes to the Bill are expected to be finalised by the end of this year.