Bank of Botswana (BoB) has signed Memoranda of Understanding (MoUs) with the Indian Reserve Bank to improve supervision of cross-border banking. In response to Mmegi Business enquiries, BoB Head of Communications, Andrew Sesinyi said the MoUs follow the licensing of three commercial banks that are wholly owned by Indian banks and supervised by the Reserve Bank of India.
“The Bank of Botswana and the Reserve Bank of India have decided to enter into Memoranda of Understanding (MoUs) to facilitate supervisory collaboration and exchange of information between the two supervisory authorities on matters of mutual interest.
“This arrangement exists or it is in the process of being entered into with all other central banks and supervisory authorities whose banks and banking groups have operations in Botswana,” said Sesinyi.
The three Indian banks operating in Botswana are Bank of India, State Bank of India and Bank of Baroda.
The remaining seven commercial banks operating in Botswana are majority owned by banks from Namibia, South Africa, Malawi and the United Kingdom. Cross border financial transactions were expected to have significantly increased with the relocation of De Beers’ sales operations from London to Gaborone in 2013.
Companies from India, which hosts the world’s largest diamond cutting and polishing centres, dominate the De Beers’ sightholder list.
According to Sesinyi, the MoU provide a framework for the BoB and other supervisory authorities to exchange information and co-operate with each other regarding the regulation and supervision of cross border banks and banking group establishments under their respective jurisdictions.
“However, nothing contained in the MoUs abrogates the powers, responsibilities and any legally binding obligations or supersedes any laws and regulations of the respective authorities as enshrined in either the Bank of Botswana Act, Banking Act or the Acts of the respective authority party to the MoU. Additionally, such cooperation is subject to confidentiality provisions in the respective jurisdictions’ legislations,” he said.
Locally, in its bid to tighten supervision, the central bank has recently signed MoUs with the Competition Authority (CA) and the Botswana Accountancy Oversight Authority (BAOA). The central bank says the main objectives of the MoUs with the CA are to foster supervision in the regulation of anti-competitive behaviour in the banking and financial services sectors.
The MOU was also aimed at promoting collaboration between the Bank and the CA in the investigation, analysis and combating of anti-competitive practices in the broader economy.