Harare - The Namibian government has introduced a new Banking Institutions Bill to revamp the country’s banking regulatory framework. The current Banking Institutions Act of 1998 has been deemed outdated and insufficient to govern Namibia’s banking sector effectively.
“Our banking laws have not kept up with the rapid changes in the global financial system and need reform to meet international standards,” said Finance Minister Iipumbu Shiimi. The new bill addresses major weaknesses in the current act and empowers the Bank of Namibia with stronger supervisory powers over banking institutions.
One key change is granting the central bank more authority to take action against failing banks or those acting unlawfully. Under the current law, the Bank of Namibia’s options are limited if a bank faces distress or engages in detrimental conduct. The new bill allows the central bank to suspend or remove directors and executives in such situations. “We need laws with more teeth to avoid a repeat of the SME Bank crisis,” Shiimi said, referring to the controversial collapse of a state-owned bank in 2017 due to reckless lending practices and poor governance.
The bill also introduces regulations on foreign and local ownership of banks for the first time. Most of Namibia’s banks are presently majority foreign-owned, but the new rules aim for a balance to promote domestic economic interests. At the same time, the bill strengthens the independence of banks’ boards of directors in overseeing operations.
New requirements for banking institutions to have “living wills” are also included in the bill. These recovery plans will detail how a bank can be swiftly resolved in an orderly manner in the event of failure. “The global financial crisis showed us that we need safeguards in place for the ‘too big to fail’ problem of large troubled banks,” Shiimi noted.
The bill further empowers the finance minister to regulate the fees that banks charge to customers. Fees must be fair, reasonable and aligned with the actual costs of services. “We have received many complaints of exploitative charges by some banks, so consumer protection is one of our key objectives,” said Shiimi.
The new Banking Institutions Bill is expected to sail through Parliament and come into effect soon. While it imposes stricter rules on the banking sector, industry leaders have welcomed the reforms. “Forward-looking legislation is needed for our banking system to become more robust, competitive and responsive to the needs of the Namibian economy,” said one bank CEO. The overhaul of the legal framework is set to usher in a new era of responsible and ethical banking practice in Namibia.
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