Rundheersing Bheenick: Consolidating the overall supervision of the financial
sector in Mauritius
Speech by Mr Rundheersing Bheenick, Governor of the Bank of Mauritius, on the occasion
of the Signature of a Protocole D'Accord and Launching Ceremony of the Joint BOM/FSC
Coordination Committee, Port Louis, 12 July 2007.
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Members of the Board of Directors of the Bank of Mauritius and of the Financial Services
Commission
The Chief Executive of the Financial Services Commission
Chairman of the Mauritius Bankers Association
Operators in the Non-bank Sector
Staff of the FSC and Bank of Mauritius
Ladies and Gentlemen
It is a great honour and indeed a pleasure for me to welcome you all to the signature of a
Protocole D'Accord and the launching ceremony of a Joint Bank of Mauritius/Financial
Services Commission Coordination Committee in an effort to promote a more structured and
active collaboration and coordination between the two regulatory and supervisory authorities.
You will appreciate that, as financial institutions increasingly operate globally and diversify
their businesses, it has become important in the interest of financial stability for supervisory
bodies to oversee the safety and soundness of these institutions on a consolidated basis.
While the Bank of Mauritius has the lead supervisory responsibility for the banking and
nonbank deposit-taking sectors, there is an urgent need to conduct consolidated supervision to
complement the supervision of licensed entities on a solo basis. This will contribute to a more
accurate assessment of the risks to which a financial institution may be exposed.
Responding to the changes in the financial services industry, the Bank of Mauritius and the
Financial Services Commission have agreed to collaborate more closely with a view to
consolidating the overall supervision of the financial sector. As consolidated supervision is
undoubtedly an essential element of effective financial sector supervision, we are today
formalizing this process of collaboration and co-operation between the Bank of Mauritius and
the Financial Services Commission through the signature of a Protocole D'Accord and the
setting up of a Joint BOM/FSC Coordination Committee. The main purpose of the Protocole
D'Accord will be to expand on the scope of the Memorandum of Understanding (MOU)
signed between the two regulatory and supervisory bodies in December 2002. The Protocole
D'Accord makes further provision for the parties to agree on the extent of their
responsibilities and harmonization of their procedures with respect to financial institutions
which are regulated by both institutions. The Memorandum of Understanding sets out a
framework of co-operation between the Bank of Mauritius and the Financial Services
Commission in their common pursuit to maintain a safe, efficient and stable financial system
in Mauritius. Both supervisory bodies will, under the terms of the MOU, work in close
collaboration to ensure the setting up of appropriate arrangements to respond to threats to
financial stability, to coordinate information sharing and avoid duplication.
Financial stability remains a major concern to both the Bank of Mauritius and the Financial
Services Commission, given their statutory responsibilities to supervise and regulate the
financial markets. Achieving financial stability is not a destination but rather a journey. It is an
on-going concern for both regulators given the continuous developments and challenge s in
the economic environment. Presently, our financial sector is under the regulatory and
supervisory purview of these two bodies. Currently, the asymmetry of information makes it
difficult to evaluate the state of financial stability. As the final resting place of risk is hard to
observe, as regulators, we can at least try, through this collaboration, to track its passage
through the markets. There are, therefore, compelling reasons for both authorities to
strengthen collaboration with a view to improving the sharing of information relevant to their
respective responsibilities.
The process of effective consolidated supervision involves qualitative as well as quantitative
dimensions. Supervisors must therefore be aware of the ownership structure, the overall
organizational structure, the corporate governance and risk management systems and all
material risks within a conglomerate. As regulators, we must have knowledge of the entire
group to properly assess risks which may emanate either from the licensee's core activities
or from its affiliation with entities that may or may not be directly regulated. As conglomerates
are showing increasing interest in banking business, we regulators have the duty to evaluate
the risks that would spill over directly or indirectly from the non-bank or non-regulated entities
of the groups. We must by all means avoid supervisory grey areas. Enhancing information
sharing between regulatory authorities right from the licensing stage helps to minimize the
risks arising from supervisory gaps.
As you are aware, Mauritius had undergone two Financial Sector Assessment Programmes
(FSAP) by a Joint IMF-World Bank Mission in recent years. The launching of this Joint
Coordination Committee shows the commitment of the regulators to promote best
international practices that meet the expectations of international organizations and of the
Basel Committee on Banking Supervision which also advocates that banking groups should
be supervised on a consolidated basis.
I now have the pleasure of announcing to you the names of the representatives of the Bank
of Mauritius on the Joint Committee. Mr. H.O. Jankee, Chief Economist, Mrs N. Sajadah
Aujayeb, Legal Officer and Mr G. Gonpot, Senior Bank Officer will represent the Bank on this
Committee. The Bank of Mauritius and the Financial Services Commission have also agreed
to the principle of rotating Chairmanship, with the Committee being chaired alternately by the
Chief Economist of the Bank and the Acting Deputy Chief Executive of the Financial Services
Commission.
Let me add that while we are a dynamic sector, we have observed that quite some poaching
of staff goes around in our sector. We do not want this to happen between our two
institutions. Quite a few employees of the FSC have applied for posts at the Bank.
On this note, I would like to thank you for your presence at the Bank today and look forward
to your support and collaboration in enabling this Joint Committee achieve its objectives.
Thank you for your attention.