IMF calls on Botswana to tighten banking laws :: Mmegi Online

Botswana needs to review its banking laws as the central bank lacks some of the legal powers required for implementing corrective action on banks that are in breach of prudential requirements or are conducting business in an unsound or unsafe manner, the International Monetary Fund(IMF) has said.According to a report compiled by an IMF team that visited Botswana last year at the request of the Bank of Botswana (BoB), the current legislative framework guiding bank resolution and financial sector crisis management is weak and it no longer provides an adequate framework for the conduct of the central bank’s responsibilities.

“Once a bank has become acutely distressed, the BoB has insufficient legal powers to resolve the bank effectively. The current powers are largely limited to the ability to issue directives to a bank, to place a bank into temporary management, and to apply to the court for the winding up of a bank or commencement of judicial management. The powers are not sufficiently certain or wide enough in scope to provide an effective legal framework for resolution,” the IMF said.

There are two laws governing supervision of banks in Botswana, the Bank of Botswana Act (BoBA) and the Banking Act (BA), whose last significant revisions date back, respectively, to 1996 and 1995.

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