the extremes of the credit delinquencies of the past. can we be sure that the basel ii framework can provide greater protection in the future? capital adequacy, even when risk - based, is no substitute for liquidity when markets dry up. you will know that we at the central bank have also embarked on a review of the operational guidelines to give banks more functional freedom, without losing sight of prudence. growth in the financial sector must be matched with the best standards of governance. it is heartening to note that the banking system in mauritius has remained insulated from the meltdown in the west in the wake of the sub - prime mortgage lead crisis. today, looking back over the twelve months ended june 2008, we are seeing strong growth in the banking sector. the number of bank branches in the country has increased from 178 to 186. the number of atms has gone up from 334 to 382. we are now on the threshold of issuing licenses for the first islamic banks. these fresh players will keep you all on your toes. june to june figures show the total balance sheet of our banks growing from about rs 624 billion to rs 729 billion in june 2008, that is an increase of over rs 100 billion in one year. there is more than adequate liquidity in the system. the declining trend in the percentage of npls to total loans continued. profits during the year shot up by rs 1 billion, or 11 per cent higher than the previous year, and were just shy of rs 10 billion. the capital base of banks continues to be strong. the shares of the two listed banks have held steady on the local stock exchange. so much so that these two banks now account for an astounding 42 per cent of total market capitalisation, compared to little above 30 per cent in june last year. we trot out these figures with some satisfaction. we are nevertheless, aware that there is no room for complacency either on our part as regulator or on the part of the banks themselves. we will maintain our vigilance and we will be proactive in dealing with any asset bubble or liquidity crunch, should we foresee any on the horizon. as a regulator on banking, one has to say, that in the past there has been rather too much inertia in the area of consumer choice, unrelated to evidence - based assessment. we want to achieve greater transparency regarding spreads, fees, charges, commission and the like. we

cash reserve ratio requirement. let us remind ourselves that this tool is being resorted to by several central banks around the world in their own fight against inflation, often in conjunction with steep rate hikes. therefore, after careful consideration of all aspects, the bank has decided to raise the cash reserve ratio from 4 per cent to 6 per cent. i must reiterate here that any tightening of monetary policy stance is always a painful exercise for central bankers. finally, while i am on this subject of inflation, let me add that in the debate surrounding the recent discussions of our monetary policy committee and on inflation generally, it is important to distinguish between the medium and the message. i depart somewhat from marshall mcluhan ’ s message that the medium is the message. this is certainly not the case here. as chairman of the monetary policy committee, i am reminded of some other more appropriate words of mcluhan who said on one occasion “ i don ’ t necessarily agree with everything i say ”. as governor, i must stay on message with the mantra of monetary stability. let us focus the debate on the evidence, the options in dealing with inflation and the signals to be made. forget the medium. hear out the message. and yes, don ’ t shoot the messenger. with these words, i sincerely hope that this re - branding exercise will steer a new path for this new bank. i wish the new owners and the new management all the very best in their endeavour. so, as governor of the central bank of mauritius, on this most propitious day, i do now exercise two of my powers and hereby revoke the licence of the first city bank … … oh yes, of course, ….. and it is my great pleasure to inaugurate a new licence for bank one ltd. thus in the words of peter quince : “ bless thee … thou art translated! ” thank you.