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Building Societies and Financial Institutions Amendment Act: Key Provisions
The Namibian Government has amended the Building Societies and Financial Institutions Act to clarify the definition of a building society and to regulate non-banking financial institutions. The changes aim to promote sound and prudential banking practices, protect depositors’ interests, and ensure the stability of the financial system.
Building Societies
A building society is now defined as an institution that accepts deposits from the public and provides loans for the purpose of purchasing or improving residential property. Building societies are required to:
- Maintain a minimum capital adequacy ratio of 10%
- Conduct their business in a prudent manner
Non-Banking Financial Institutions
The Act defines non-banking financial institutions as entities that provide financial services, such as:
- Leasing
- Factoring
- Money transmission
but do not take deposits or provide loans. Non-banking financial institutions are required to:
- Register with the Bank of Namibia
- Maintain a minimum capital adequacy ratio of 5%
Investigations
The Act grants the Bank of Namibia the power to investigate any person suspected of conducting banking business in contravention of the Act. The bank’s investigators may:
- Enter premises
- Search for documents
- Seize assets
- Question individuals in connection with an investigation
Penalties
The Act provides for penalties for non-compliance with its provisions, including:
- Fines
- Imprisonment
Repeat offenders may face more severe penalties, including the closure of their business.
Effective Date
The amendments to the Building Societies and Financial Institutions Act will come into effect on [insert date].
Conclusion
The Namibian Government’s amendments to the Building Societies and Financial Institutions Act aim to promote a stable and efficient financial system. The changes provide clarity on the definition of building societies, regulate non-banking financial institutions, and empower the Bank of Namibia to conduct investigations and enforce penalties for non-compliance.