mobile penetration rate is 99 per cent for a population of nearly 1. 3 million ( and around 375, 000 fixed telephone lines ), this means of payment seems very convenient for low - value transactions. if the service runs in the low - value segment, it would not have systemic impact. but the matter needs to be discussed further with all parties concerned – cim finance, the telephone service provider, the carrier or gateway, and other regulators, namely the financial services commission and the information and communication technologies authority ( icta ). there should be some coordination between financial and telecoms regulators. in fact i have already had meetings with the icta in this respect. regardless of what the law says, i don ’ t believe that it was the intent of the legislator that a payment product would go unregulated. please do not get me wrong – we are not against this new product! but we need to be prudent and alive to any possible danger and ensure that there are not any pitfalls ahead. to come back to cim visa card – the bank of mauritius fully backs such developments and pledges the necessary support to all financial institutions which roll - out new products for the benefit of their clients. but as the regulator, we are fully aware that along with such initiatives comes a wide range of inherent risks. these risks should be carefully evaluated and credible mitigation measures must be put in place to ensure the safety of depositors ’ funds and preserve the soundness of the financial system. bis central bankers ’ speeches my first advice to you is that you should conduct a proper screening of your clients to ensure that your credit card advances do not turn into bad loans. you should ensure that you have in place procedures to chase the bad clients and a good fraud investigation framework. your recent participation in the mauritius credit information bureau will certainly contribute to a better assessment of the creditworthiness of your prospective borrowers and reduce your non - performing loan ratio. therefore, prudence in credit risk management should be your priority. growth in the use of credit cards has been, to say the least, spectacular. between 2000 and 2010, credit card advances increased by more than 175 per cent. the credit card has grown to become a ubiquitous financial product used by households. there are presently more than one million credit cards in circulation for total advances amounting to 1. 6 billion rupees – the biggest chunk, 1. 5 billion rupees, represent personal and professional sectors – which means that

there has been a notable change in consumer behavior. consumers use credit cards for two purposes : ( i ) as a substitute for cash and cheques, and ( ii ) as a source of revolving credit. therefore my concern is whether the consumer fully understands the costs and implications of using credit cards and whether credit cards are encouraging over - indebtedness, particularly for those least able to pay? in the us, for example, many households have thus been caught in the so - called “ plastic trap ” – consumers do not seem to be able to repay their balance, especially those who opt to pay only the minimum repayment amount by the due date of each month. in mauritius, credit card advances currently represent around 3 per cent of total household credit. concurrently, credit to the household sector by banks has been growing at a faster pace than nominal gdp ( although the credit was mainly for property acquisition, generally viewed as a low risk investment. ) as a regulator we need to remain vigilant and keep an eye on the delinquency rate of credit cards. and so should you for the health of your loan portfolio. my second concern which of course is more in the nature of an inducement, not a concern, for you is that card business is very good business. financial institutions that are in the card business know that they make very good money from card - related fees. since credit cards are unsecured in nature, interest rates on credit cards are very high – around 2 per cent monthly. there are also fees for late payments, fees for cash withdrawal, and other penalties, on top of the hidden “ swipe fees ” that banks and credit card companies collect each time a customer pays with his credit card. unfortunately, most of the time, such costs are passed on to the customer. and i can tell you, time and again we receive complaints from the public that credit card fees are prohibitive. in the us there is what i call the battle of the swipe fees raging on. the senate passed an amendment directing the federal reserve to reduce “ swipe fees ” ( on debit cards ) and to limit them to the “ reasonable and proportional ” cost of each transaction. you can imagine the intense lobbying from banks to push for changes, or outright repeal of such a legal requirement, arguing that they are being deprived of a significant source of revenue and that they would be forced to trim down on some of their services to recoup the loss. on the other