Mauritian Banking Sector History And Evolution Finance Essay

The Mauritian administration has transformed itself from a deficient sugar administration in 1970’s to export-led enlargement manoeuvre. After some spell the Export Processing Zparticular sector was conduct-ind to aid to subside unemployment roll and quenchedlandish straightforward boarding from Hong-Kong, France and UK increased which led to a rectify Mauritian administration. The enlargement of the state was examined by Arbache and Page (2008) from 1975 – 2005 and it was rest that the island “was particular of the best performers” compared to Namibia, Seychelled and south Africa ce specimen, in stipulations per capita enlargement and gentle enlargement disproportion.

Along the fruit of the manufacturing sector, the tourism sector surfaced as an essential shaft contributing to the administration by increasing quenchedlandish hues. Though these 2 sectors were doing polite, mutation in advantages sector to-bootk fix in the 1990’s.

Orientation was made to the financial advantages sector where the ocean convergence was on the banking and prophylactic. Laws were dogmatical facultying the fruit of this sector. In 1988, the Banking Act was amended to conduct-in unpremeditatedshore banking in Mauritius. Then, the Stock diversify of Mauritius Act 1988 regularityatic the Stock Diversify of Mauritius.

3.1 The Mauritian Banking Sector Certainty and Evolution

The tallest bank life regularityatic is the “Bank of Mauritius” in 1813 failed in 1825. Then, along with the roverification unpremeditated of a relieve Bank of Mauritius in 1832, the Mauritius Retail Bank (MCB) was regularityatic in 1838. Both banks were severely artful by the financial occasion in London in 1847, though the MCB life the simply particular which survived to give. The MCB is now the comprehensivest bank with market portion-quenched of elapsed than 40%.

In restitution to the over, a third Bank of Mauritius was establishes in 1894 beginning a scion in Seychelles which was then extraneous by HSBC in 1916. HSBC is, consequently, referred to as the oldest quenchedlandish bank life followed by Barclays Bank Mauritius ( a descendent of National Bank of South Africa).

A fantastic Bank of Mauritius (BoM) was regular up which earmarked the monetary certainty of the Island. Life regularityatic in 1967 as advanceible bank, it has the sole faculty to upshot referablees.

Some functions of the advanceible bank are:

Formulation and implementation of monetary policy

Government’s bank

Managing of the disclosed default and quenchedlandish diversify reserves

Regulating and supervising of banks

Today, Mauritius possesses a broken banking sector with 20 banks. Banks fashion the worthiest of the financial regularity as 70% of Total Financial Sector Assets are from the banking sector [Mohamudally-Boolaky and Ramlwhole (2009)] – staying the certainty the banking sector contributed elapsed than 6% of GDP ce the elapsed year [Board of Boarding Report 2011]. Besides transmitted banking facilities, banks supply the aftercited facilities: Point of Sales, ATM, Card, Internet banking, Mobile Banking, E-commerce facilities and so on.

3.1.1 Ocean Fruits in the Mauritian Banking Sector

3.1.1.1 Segmental Reporting subordinate a Unique Banking Indulge Regime

As from 2004, banks were no elapsed segregated into onshore and unpremeditatedshore as the Banking Act 2004 was amended to dominate whole banks with a unique banking indulge. Operations are now classified into Segment A (other banking activities than Segment B) and Segment B (Provision of financial advantages to non-residents that creates “outlandish commencement income”) [Guideline on Segmental Reporting subordinate a Unique Banking Licence Regime – BoM (2005)].

3.1.1.2 CAMEL Rating

The BoM verifications the CAMEL rating, which is an International bank-rating regularity, to trounce particular banks according to certaintyors that enfold financial, operational and managerial enterprise. CAMEL stands ce:

C – Chief similarity

A – Asregular quality

M – Administration

E – Hues

L – Liquidity

Table: CAMEL Ratings ce the Quarter ended 30 June 2012

Bank

Overwhole Rating *

1

ABC Banking Corporation Ltd

3+

2

AfrAsia Bank Limited

2-

3

Bank of Baroda

2+

4

Bank Particular Limited

2-

5

Banque des Mascareignes Ltée

3-

6

Barclays Bank PLC

2-

7

Bramer Banking Corporation Ltd

3+

8

Century Banking Corporation Ltd

2-

9

Deutsche Bank (Mauritius) Limited

2+

10

Habib Bank Limited

2-

11

HSBC Bank (Mauritius) Limited

2+

12

Investec Bank (Mauritius) Limited

2+

13

Mauritius Post and Cooperative Bank Ltd

3+

14

P.T Bank Internasional Indonesia

2-

15

SBI (Mauritius) Ltd

3+

16

Standard Bank (Mauritius) Limited

2-

17

Standard Chartered Bank (Mauritius) Limited

2-

18

State Bank of Mauritius Ltd

2+

18

The Mauritius Retail Bank Limited

2-

20

The Hongkong and Shanghai Banking Corporation Limited

2+

* 1: Solid 2+ and 2- : Satisfactory 3+ and 3- : Fair 4: Marginal 5: Unsatisfactory

Source: Bank of Mauritius Communiqué ce CAMEL rating ce banks 28 December 2012

3.1.1.3 Mauritius Trustworthiness Instruction Bureau (MCIB)

According to BoM MCIB update (2005), the MCIB “collects, stores and supplys trustworthiness instruction to lending institutions encircling customers’ trustworthiness charybdiss”. As from December 2005, banks scarcity to trace encircling trustworthiness charybdis of their borrowers from the MCIB anteriorly giving any trustworthiness quickness to their customers.

3.1.1.4 BASEL I & II Framework

Basel I and II has been implemented in Mauritius in 1993 and 2008 respectively by the advanceible bank and Worthiestl III is subordinate negotiations.

Subordinate Worthiestl II, ce chief similarity principles, banks are required to verification the Standardised Approach to Trustworthiness Occasion probable acclaim ce Internal Ratings-Based Approach granted from the BoM [BoM (2008)].

3.1.1.5 Technological Fruit

Technological advances enjoy contributed massively to the banking sector. Fantastic facilities enjoy been disclosed such as:

Point of Sales;

ATM;

Cards advantages;

Internet and Mobile banking;

E-commerce facilities and

Banks are alike via the SWIFT network;

Cheque Truncation Regularity and so on

3.1.1.6 Mutation

Banks are seeking regional mutation, ce specimen SBM has sciones in Madagascar and India [FSSA (2003)]. Also retail banks such as SBM are seemly whole banks by diversifying into the aftercited products: Wealth Administration & Private Banking, Global Business, Fiduciary advantages, Asregular Financing, and Stock brokering, unarrangedst others.

Another ocean mutation of the financial sector is towards Islamic Banking subordinate the Shari’ah principles. The tallest bank to unpremeditateder this advantage is the HSBC through the HSBC Amana Scion. Then, in 2011 Century Banking Corporation rouseed to opetrounce as a altogether Islamic bank.

3.1.2 Benefits of the over ocean fruits

The aftercited are some of the benefits:

There has been an correction in occasion administration;

Banks are seemly elapsed competitive ascribable to technological advances and they are having increasing technical efficiency;

Services unpremeditatedered are life intended to mold to customers’ require – les spell consuming, availability on a 24/7 basis

Overall, banks are life elapsed and elapsed fertile. A probation of that is their prosperity during the Global Financial Occasion 2008. Though numerous banks barred down in the US ascribable to the financial occasion, the Mauritian banking sector remained flexible, unendangered, desirable and extremely chiefised. As per the FSR 2011, this was feasible ascribable to tall chief similarity capacity, carefully intended regulations and rectify occasion administration.

3.1.3 Challenges and Coming of the Mauritian banking regularity

The coming of the banking sector is prevailing as it drives the financial sector, which is a ocean shaft, to uncollected enterprise.

The coming of banks that Mauritian authorities are calm?} discussing encircling is the chief capacitys of Worthiestl III. This is becaverification banks enjoy a solid chief comcomcomposition and they are referable laagered to-boot fur in the fruits of palpable financial markets [FSSA (2008)]. However, it get enjoy to be amended to benefit the national texture says J.Benoit (July 2012).

According to Khadaroo (2008), the competition of the BoM in the COMESA Regional Payment and Regulartlement Regularity get algentle extraterritorial payments unarranged COMESA countries. This get subject costs and spell fascinated ce the affair to transfer fix and augment defence.

Moreover, the island’s transmitted European markets are in difficulty; consequently, authorities are planning to comcomcomposition Mauritius as an boarding platfashion to converge Africa and Asia [Zafar (2011)]. However, the problems that businesses get engagement are: noncommunication of advance to finance and infrastructure, decay and political fickleness [Business mega (2013)].

Furthermore, the CEO of AfrAsia bank, J.Benoit (September 2012), said that fantastic regulations and dominateance scarcitys to be quenched gone this get promote banks to innovate. According to him, banks scarcity to be promoted to go ce niche markets and comprehensive banks to do fantastic things.

In restitution, the Mauritian banking regularity noncommunications professionals to benefit the financial sector fruit. Consequently, the island has been discloseded up to quenchedlandish cleverness to strengthen this fruit. Also, tertiary institutions enjoy intended fantastic courses – ce specimen the University of Mauritius conduct-ind Banking & Finance and International Business Finance courses to stay the financial enlargement; and there are numerous fantastic courses to conclude. Besides, from the Budget 2013, banks get unpremeditateder a completion of Rs 100,000 per year to students ce their university fees.

Last yet referable last, the Mauritian financial sector get be elapsed flexible to shocks in the coming gone this sector is seemly elapsed disclosed, charybdiss get endure to be managed prudently and there get be true augmentment in transparency