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Mozambique Banking Regulation: A Comprehensive Overview

March 2023 - London

The banking sector in Mozambique is governed by a set of regulations aimed at ensuring the stability and integrity of the financial system. This article delves into the key aspects of the regulatory framework that governs the banking industry in Mozambique.

Risk Management and Control

  • The Banking Regulation Authority (BM) requires banks to implement effective risk management systems to identify, assess, and mitigate risks associated with their activities.
  • Banks must establish policies, standards, and procedures to define responsibilities and lines of authority, and monitor risk levels to facilitate timely adjustments.

Capital Requirements

  • Banks in Mozambique are required to maintain a minimum level of capital, which has been increased from MZN 500 million (approximately USD 7.5 million) to MZN 1 billion (approximately USD 15 million) as of January 2022.
  • The BM also requires banks to hold sufficient liquid assets and to maintain a minimum ratio of net worth to total risk-weighted assets.

Code of Conduct

  • The Banking Code of Conduct sets out the principles that govern the conduct of credit institutions and financial companies in Mozambique.
  • The code emphasizes the importance of:
    • Assisting clients
    • Providing clear and concise information
    • Maintaining confidentiality
    • Ensuring fairness and transparency in all dealings with customers

Deposit Guarantee Fund

  • In the event of a bank failure, depositors are protected by the Deposit Guarantee Fund, which is financed by contributions from banks and other financial institutions.
  • The fund provides coverage up to MZN 100,000 (approximately USD 1,500) per depositor, per institution.

Regulation of Banking Activities

  • The BM regulates various banking activities, including:
    • Deposit-taking
    • Credit transactions
    • Money-market transactions
    • Financial and foreign exchange transactions
    • Investment services
  • Banks are authorized to undertake all these activities, except for accepting deposits from the general public, which is limited to banks and micro-finance institutions.

Conclusion

The regulatory framework in Mozambique aims to ensure the stability and integrity of the banking system by requiring banks to implement effective risk management systems, maintain sufficient capital, and adhere to a code of conduct. The Deposit Guarantee Fund provides protection for depositors, while the BM regulates various banking activities to ensure transparency and fairness in all dealings with customers.

About Vieira de Almeida

Vieira de Almeida is a leading law firm in Mozambique, providing expert legal advice on banking regulation, finance, and investment. Our team of experienced lawyers has extensive knowledge of the regulatory framework in Mozambique and can assist clients with any queries or concerns they may have.

Contact Us

For more information on Vieira de Almeida’s banking regulation practice, please contact us at [insert contact details]. We look forward to assisting you in navigating the complex regulatory landscape in Mozambique.