ACF 2205(3)-Week 11 & 12-Lecture 8 05.10.2011

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Banking Structure in Mauritius

Week 14-Lecture 10 (07.10.11)

ACF 2205 (3) – Banking and Financial Services

BSc (Hons) Finance– Year 2

07.10.2011ACF 2205(3)-Week 14-Lecture 10

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Banking Structure in Mauritius

20 Banks & 9 non-bank DTIs DTIs (i.e. banking institutions and non-bank

financial institutions) regulated by Bank of Mauritius (BOM) under the provisions of the Banking Act 2004 and the Bank of Mauritius Act 2004.

MCB and SBM account for about 60% of the banking market share. Both banks are among the 10 largest banks in Africa.

Commercial banks have diversified into non-banking business through subsidiaries and affiliates.

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Domestic Banks in Mauritius1. AfrAsia Bank Limited2. Bank of Baroda ***3. Banque des Mascareignes Ltée***4. Bank One Limited5. Barclays Bank PLC*** 6. Bramer Banking Corporation Ltd.7. Habib Bank Limited8. Mauritius Post and Cooperative Bank Ltd9. SBI (Mauritius) Ltd***10. Standard Bank (Mauritius) Limited***11.State Bank of Mauritius Ltd***12.The Hongkong and Shanghai Banking Corporation Limited13.The Mauritius Commercial Bank Ltd***14. ABC Banking Corp.15. Century Banking Corporation (Islamic Bank)*** Banks offering both domestic and offshore banking services

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Pure Offshore Banks in Mauritius

1. Deutsche Bank (Mauritius) Limited2. HSBC Bank (Mauritius) Limited3. Investec Bank (Mauritius) Limited4.P.T Bank Internasional Indonesia5. Standard Chartered Bank (Mauritius) Limited

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Other Regulatees of the Bank of Mauritius (1/4)

1. Money Changers

• They need to be issued with a Money Changer License to be authorised to carry out only change business and not Forex business.

• They are subject to onsite and offsite examination by the BOM similar to banks

• Since they are more prone to Money Laundering activities, they are closely monitored by the BOM.

Adobe Acrobat Document

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Other Regulatees of the Bank of Mauritius (2/4)

2. Foreign Exchange Dealers

• They need to be issued with a Foreign Exchange Dealer’s License and are authorised to carry out change business, Funds Transfer and Forex Transactions including spot and forward bookings.

• They are subject to onsite and offsite examination by the BOM similar to banks

• They are also closely monitored by the BOM because of Financial Crime Risks.

Adobe Acrobat Document

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Other Regulatees of the Bank of Mauritius (3/4)

3. Building Society• A Non-Bank Deposit Taking Institution

licensed and regulated by the Bank of Mauritius.

• Mauritius Housing Corporation therefore authorised to accept deposits from public and grant mortgage loans to public.

• Do not provide any payment mechanism.• Have not innovated in the delivering of

products, services and channels.

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Other Regulatees of the Bank of Mauritius (4/4)

4. Mutual Aid Association• The Mauritius Civil Service Mutual Aid

Association is a Non-Bank Deposit Taking Institution, licensed and regulated by the Bank of Mauritius.

• Authorised to accept deposits from public but loans are only granted to employees of the public and para statal bodies.

• Do not provide any payment mechanism.• Partly engaged in Financial Innovation.

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Non-Bank Financial Institutions Authorised to Transact Deposit-Taking Business

in Mauritius

1. Axys Leasing Ltd (formerly Capital Leasing Ltd) 2. CIM Finance Ltd 3. Finlease Company Limited

4. Dolberg Asset Finance Ltd5. La Prudence Leasing Finance Co. Ltd.

6. Mauritius Housing Company Ltd7. Mauritian Eagle Leasing Company Limited8. SICOM Financial Services Ltd9. The Mauritius Civil Service Mutual Aid Association Ltd10. The Mauritius Leasing Company Limited

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The Port Louis Automated Clearing House (1/6)

Establishment of a Port Louis Clearing House in 1967 following Bank of Mauritius Act 1966

Clearing House responsible for the clearing of cheques and other negotiable instruments.

Clearing House Committee: A committee comprising of members of authorised domestic banks under chairmanship of Bank of Mauritius

Nov. 2002: Automation of the Port Louis Clearing House known as Port Louis Automated Clearing House

07.10.2011ACF 2205(3)-Week 14-Lecture 10

11The Port Louis Automated Clearing House (2/6)

Automation= Standardisation of cheques using Magnetic Ink Character Recognition (MICR) technology

Automation= Clearing information and settlement of cheques and other instruments would be exchanged electronically through MACSS

PLACH Committee set up. Issuance of PLACH RulesSect. 48(1) of the Banking Act 2004 empowers the

Central Bank to organise in conjunction with the domestic banks a clearing house to facilitate the clearing of cheques and other payment instruments

Sect. 53 of the Banking Act casts obligation on banks to comply with the instructions issued by the Central Bank for the smooth functioning of the clearing house set up by the regulator

07.10.2011ACF 2205(3)-Week 14-Lecture 10

12The Port Louis Automated Clearing House (3/6)

Day to day business of the PLACH shall be conducted under the control of the Bank of Mauritius

Clearing Sessions: Twice daily on working days (10h00 and 15h00)

Settlement: By MACSS on a net basis at the end of each clearing session through the account which participating banks hold with the Central Bank

07.10.2011ACF 2205(3)-Week 14-Lecture 10

13The Port Louis Automated Clearing House (4/6)

Unpaid Cheques drawn on Head Office and branches of banks shall be returned not later than the second clearing of the working day following presentation

All MICR Cheques presented for payment shall be impressed with the presenting bank’s clearing stamp on the face of the cheque. Stamp shall indicate the name of the bank and branch and the date of collection

07.10.2011ACF 2205(3)-Week 14-Lecture 10

14The Port Louis Automated Clearing House (5/6)

Section 3.04: Participating banks shall remove all pins, staples, clips and attachments from each cheque delivered to other participating banks

Section 4.11: Returned ChequesA MICR encoded cheque may be returned with

a maximum of 3 reasons at a time. Cheques returned more than 3 times or with the reason ‘Refer to Drawer’ shall not be presented again

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The Port Louis Automated Clearing House (6/6)

No. of reasons to return a cheque: +50Examples: Not arranged for, Present Again, Refer to

drawer, Account Closed, A/C Payee only, A/C Stopped, Bank’s discharge incomplete or irregular, Cheque mutilated, Cheque Spoilt, Cheque Stale, Drawer deceased, Drawer’s signature differs, Date incomplete/irregular, Bank closed, Wrongly cleared, Payee’s name missing, No account, Undated, Drawer’s signature required, Teller’s Stamp missing, Payment stopped by drawer

Section 4.09: The reasons for dishonour must be stated in words and in full on the face of the cheque and on the top of it.

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PLACH Member (Participating) Banks BANK CODE BANK NAME

1 Bank of Mauritius

2 Bank of Baroda

3 Barclays Bank PLC

5 Bank One Ltd

6 Habib Bank Ltd

7 Hong Kong and Shanghai Banking Corporation Ltd

9 Mauritius Commercial Bank Ltd

10 Bramer Banking Corporation Ltd

11 State Bank of Mauritius Ltd

12 Mauritius Post and Cooperative Bank Ltd

14 Banque des Mascareignes

20 State Bank of India Ltd

22 Standard Bank (Mauritius) Ltd

25 AfrAsia Bank Ltd

27 ABC Banking Corporation Ltd

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The Mauritius Credit Information Bureau (1/4)

The MCIB shall be a repository of credit information, both positive information and negative information on all recipients of credit facilities and such other information as may be collected from Utility Companies and Hire Purchase Companies.

The MCIB shall not collect information on deposit instruments, current or other accounts showing positive balances.

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The Mauritius Credit Information Bureau (2/4)

It is mandatory for all Participants to make the necessary enquiry from the MCIB before approving, increasing or renewing any credit facility.

Participants may make bona fide enquiries from the MCIB on potential guarantors to applicants for credit

facilities provided that Participants have on record documentary evidence, which may either be a letter from the guarantor or his signature on the application form, attesting that he has consented to be the guarantor of the applicant.

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The Mauritius Credit Information Bureau (3/4)

MCIB ParticipantsAll institutions offering credit facilities including

banks, non-bank deposit taking institutions, leasing companies, insurance companies, the Development Bank of Mauritius Ltd and any such institution as may be admitted to participate in the MCIB shall be Participants of the MCIB.

Adobe Acrobat Document

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The Mauritius Credit Information Bureau (4/4)

Submission and Update of Credit InformationAll Participants shall feed the MCIB, within

such time frame as may be determined by the MCIB, with credit information, both positive and negative, on existing recipients of credit facilities, including those of their branches, in electronic form through the MCIB network or such other media as may be specified by the MCIB.

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The Mauritius Automated Clearing and Settlement Systems

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Thank you!