Bank of Namibia on its regulatory mandate
Emerging banks have voiced their frustration over the stringent regulatory environment that the central bank has made them operate in and hence their limited growth. How do you respond to this allegation?
The Bank of Namibia exercises its supervisory and regulatory function as mandated by the Bank of Namibia Act (1997) and the Banking Institutions Act, 1998 (Act No.2 of 1998) in a fair and equitable manner with the aim of maintaining and fostering an effective and efficient banking system. In this regard, the Bank continues to enforce requisite standards and determinations necessary for the proper functioning of a world-class system. For example, the enhancement of the regulatory and supervisory environment, as well as risk management practices of commercial banks are done with the support and sanction of the industry. This comprehensive consultation is undertaken to fully consider the industry views and presentations on possible impacts of proposed regulations. Further, the Governor of the Bank of Namibia regularly interacts with members of the Bankers Association of Namibia where issues of concern may be tabled and resolved. Therefore, appropriate avenues exist to engage issues that may impact on the operations of entities under the supervision of the Bank. The Bank is yet to receive a complaint or concern in this regard.
There is also a general opinion that the BoN overprotects established banks like First National Bank, Standard Bank and Nedbank. Is this true and how can it be addressed?
The Bank is not aware of such a sentiment expressed openly or at appropriate fora established to deal with such matters. The Bank engages all commercial banks in a transparent and equitable manner and maintains sound relations with all entities. In fact, the Bank recently decided that the Basel III Capital Adequacy Framework – an international framework to enhance the regulatory environment since the world financial crisis – must only become applicable to the larger banking institutions, which are considered as Domestic Systemically Important Banks. This means, in retrospect, that more stringent capital rules will be applied to those banks referred to as being overprotected, compared to the others.
What assistance do you offer upcoming commercial banks such as the SME Bank, Ebank, Trustco Bank, etc?
The Bank of Namibia confines itself to its regulatory function as per the Act. Thus, it is incumbent upon shareholders and interested parties to fully support a new entrant in the market to sustain its operations as per the approved licence and business plan. Further, the shareholders have an obligation to the depositors, creditors and employees of such an entity to carry out this function sensibly and appoint a skilled management to guide the affairs of the entity successfully. However, the Bank is mindful of the operating challenges that may be experienced by new entrants into the market. Therefore, the Bank constantly engages with new players in the industry with the view to help them meet their regulatory obligations as set out in the licensing requirements in a pragmatic manner.
Is there anything else you would like to add in this regard?
The Bank of Namibia is committed to ensure the banking sector contributes positively to the national economy. The Bank subscribes fully to the undertaking by government to make the sector accessible and inclusive. It therefore actively promotes vibrant competition in the sector. The Bank wishes to reassure relevant stakeholders and the public at large that it will continue to exercise its regulatory function in an even-handed manner in support of the growth of the sector.
Responses compiled by Kazembire Zemburuka -Deputy Director: Corporate Communications Department of Strategic Communications and Financial Sector Development, Bank of Namibia
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