Proposal to Carry On Financial Business

The Bank of Swaziland has proposed new regulations for financial institutions and agents operating in the country. The proposal aims to outline new requirements for obtaining and maintaining a licence to carry on financial business.

Key Requirements

• Financial institutions and agents will be required to pay an annual fee, which will be determined by the Minister of Finance.
• The licence will be granted for a period not exceeding one year and can be renewed upon application prior to its expiration.
• The Bank reserves the right to impose conditions on the licence holder, including limitations on their activities.
• Failure to comply with these conditions or the terms of the licence may result in revocation of the licence.

Consequences of Non-Compliance

• Before revoking a licence, the Bank will give the holder notice of its intention and afford them an opportunity to show cause why the licence should not be revoked.
• The proposal also provides for the suspension of business operations by the holder after notice has been served.
• In case of revocation, the Bank will publish a notice in the Gazette and a newspaper of general circulation in Swaziland.

Penalties

• Any person acting as an agent without a valid licence commits an offence and may be liable to a fine of up to E50,000 and an additional fine of E25,000 per day for each day the contravention continues.

Disclosure Requirements

• Financial institutions and agents will be required to disclose certain information upon request, including:
  • The nature of their licence
  • Terms and conditions attached to it
  • Places where they may carry on their activities

Capital and Reserve Account Requirements

• Financial institutions will be required to maintain unimpaired capital and a reserve account with minimum amounts specified in section 20.
• The proposal prohibits the declaration of dividends or transfer of profits if there is an impairment of capital or the reserve account.

Public Comment

The Bank has called for public comment on the proposed regulations, which are expected to come into effect in the near future.

Financial Requirements and Limitations

Financial institutions will be required to meet certain financial requirements, including:

• Maintaining a minimum amount of capital and reserve account
• Calculating risk-weighted assets
• Transferring profits to the reserve account

Minimum Capital Requirements

• Banks must have a minimum required capital of at least five percent of their liabilities to the public in Swaziland.
• Credit institutions and other financial institutions must have a minimum required capital of at least E50,000.

Reserve Account Requirements

• Financial institutions will be required to transfer each year to their reserve account a sum equal to not less than ten percent of their net profits until the balance in the reserve account is equal to their minimum required capital.
• The proposal also provides for a gradual increase in the minimum required capital over time.

Industry Response

The proposal has been welcomed by industry experts, who say it will help to improve the stability and transparency of the financial sector in Swaziland.