The national authority for banking regulation, supervision and resolution is the Bank of Mauritius (BoM).

The primary object of the BoM is to maintain price stability and to promote orderly and balanced economic development. The other objects of the BoM are:

1. to regulate credit and currency in the best interests of the economic development of Mauritius;
2. to ensure the stability and soundness of the financial system of Mauritius; and
3. to act as the central bank for Mauritius.

Under the Banking Act 2004 (Banking Act), the following activities trigger the requirement of a banking license:

• banking business
• islamic banking business
• private banking business
• digital banking business

“banking business” means:

1. the business of accepting sums of money, in the form of deposits or other funds, whether or not such deposits or funds involve the issue of securities or other obligations howsoever described, withdrawable or repayable on demand or after a fixed period or after notice; and
2. the use of such deposits or funds, either in whole or in part, for:
   1. loans, advances or investments, on the own account and at the risk of the person carrying on such business;
   2. the business of acquiring, under an agreement with a person, an asset from a supplier for the purpose of letting out the asset to the person, subject to payment of instalments together with an option to retain ownership of the asset at the end of the contractual period;
   3. paying and collecting cheques drawn by or paid in by customers and making other payment instruments available to customers; and
3. includes such services as are incidental and necessary to banking.

“Islamic banking business” means any financial business, the aims and operations of which are, in addition to the conventional good governance and risk management rules, in consonance with the ethos and value system of Islam.

“private banking business” means the business of offering banking and financial services and products to high-net-worth customers, including but not limited to an all-inclusive money-management relationship.

“digital banking business” means banking business carried on exclusively through digital means or electronically.

The Banking Act provides for different licences for the different banking services as described under Question 2 above.

A bank with a banking licence for “banking business” can offer Islamic and private banking services as part of its regular banking services without needing additional licences. However, a bank holding an Islamic, private, or digital banking licence is authorized to exclusively conduct the respective business.

Banks licensed exclusively for private or Islamic banking can apply to the BoM to conduct their licensed activities solely through digital means or electronic delivery channels.

A banking licence does not automatically permit activities beyond those specified in the licence. If a bank engages in services not expressly provided in its banking licence, it will need to obtain additional licences under the relevant laws. Please refer to paragraph 6 below for an example of an additional licence which a bank may apply.

Under section 11C of the Banking Act, a financial institution, including a bank, may apply to the BoM for a regulatory sandbox authorisation. In 2024, the BoM introduced its Guideline on Regulatory Sandbox Authorisation, which allows financial institutions to test fintech, regtech and other innovative financial solutions within a controlled environment under the BoM’s oversight. The goal is to promote technology-driven financial innovations that introduce new business models, processes or products or that facilitate regulatory compliance.

Applicants must meet eligibility criteria and submit applications detailing potential risks, necessary safeguards and required disclosures for users. Testing periods under this authorisation extend up to 12 months, with possible further extensions, supporting innovation while ensuring consumer protection and financial system integrity.

The Virtual Asset and Initial Token Offering Services Act 2021 (VAITOS Act) enable the Financial Services Commission of Mauritius (FSC) to regulate and supervise Virtual Asset Service Providers (VASPs) and issuers of Initial Token Offerings (ITOs) in the non-bank financial services sector in Mauritius.

A VASP is a person that carries out virtual asset-related activities on behalf of others. This includes:

1. exchange between virtual assets and fiat currencies or exchange between one or more forms of virtual assets (Class “M” licence)
2. transfer of virtual assets; (Class “O” licence)
3. safekeeping of virtual assets or instruments enabling control over virtual assets; (Class “R” licence)
4. administration of virtual assets or instruments enabling control over virtual assets; (Class “R” licence)
5. participation in, and provision of, financial services related to an issuer’s offer and sale of a virtual asset or an issuer’s offer or sale of a virtual asset (Class “I” licence)

A VASP must apply to the FSC for a licence based on the specific activity it intends to carry out. The licences are divided into several categories – Class “M”, Class “O”, Class “R” and Class “I” – each corresponding to the virtual asset-related activities mentioned above. For activities involving the safekeeping (custody) of virtual assets, the VASP is required to obtain a Class “R” licence (Virtual Asset Custodian).

A bank may also apply for a Class “R” or Class “I” licence to operate as a VASP, but only with prior written approval from the BoM. Additionally, a bank may apply for a Class “M”, Class “O”, or Class “S” licence through its subsidiary to conduct VASP activities.

Similarly, a holder of a licence under the National Payment Systems Act 2018 may also apply, through its subsidiary, for a VASP licence, subject to BoM approval.

Custody

Under the Virtual Asset and Initial Token Offerings Services (Custody of Client Assets) Rules 2022 issued by the FSC, the holder of a Virtual Asset Custodian Licence (a Virtual Asset Custodian) must establish, implement and maintain adequate organisational arrangements to minimise and mitigate the risk of the loss or diminution of clients’ virtual assets, or the rights in connection with those virtual assets. While in custody of virtual assets, a Virtual Asset Custodian must amongst other things:

1. effect appropriate registration or recording of who has legal title and rights of access to virtual assets it holds in custody.
2. be clear in its agreements with clients regarding the basis on which it holds virtual assets for clients, and in particular whether they are held: (i) on a segregated basis, in which case the Virtual Asset Custodian needs to clearly identify and segregate virtual assets belonging to different clients or (ii) on an omnibus basis, in which case the Virtual Asset Custodian needs to ensure at all times that the total amount and type of virtual assets held for clients at all times matches the amounts it has agreed to hold for its clients.
3. not use a client’s virtual assets for its own account or the account of any other person or client of the Virtual Asset Custodian, unless (i) the client has given express prior consent to the use of the virtual assets on specified terms and (ii) the use of that client’s virtual assets is restricted to the specified terms to which the client consents.
4. Virtual Asset Custodian must not grant any security interest, lien or right of set-off to another person over a clients’ virtual assets unless certain prescribed conditions are met.

Issuance

ITOs means an offer for sale to the public, by an issuer of initial token offerings, of a virtual token in exchange for fiat currency or another virtual asset. An issuer of ITOs must apply and be registered with the FSC. Under section 25 of the VAITOS ACT, an applicant must amongst other things:

1. have adequate resources, infrastructure, staff with the appropriate competence, experience and proficiency to carry out the business activities of an issuer of initial token offerings.
2. have adequate arrangements in place for proper supervision of everything done as an issuer of initial token offerings so as to ensure compliance with the VAITOS Act and other applicable laws.
3. be a fit and proper person to carry out the business of initial token offerings.

An issuer of initial token offerings must, in its white paper, provide full and accurate disclosure of information which would allow potential purchasers to make an informed decision.

Any advertisement relating to the offering of ITOs must be (i) accurate and not be misleading, (ii) clearly identifiable as an advertisement (iii) consistent with the information contained in the white paper and (iv) compliant with any rules made by the FSC.

Any entity which fails to abide by the requirements of the VAITOS Act would, inter alia, be liable to fines of a maximum of MUR 5 million and a maximum imprisonment term of 10 years.

Under the current legal and regulatory framework in Mauritius, virtual assets/crypto assets do not qualify as “deposits” under the Banking Act.

Pursuant to Section 20 of the VAITOS Act, a VASP has an obligation to maintain such minimum stated unimpaired capital and such other financial requirements, as prescribed by the FSC.

Pursuant to the Virtual Asset and Initial Token Offerings Services (Capital and Other Financial Requirements) Rules 2022 (Capital Rules) issued by  FSC, a VASP must as a minimum, as unimpaired capital and liquidity resources, have at all times the greater of –

1. the own funds requirement; or
2. the prudential requirement; or
3. such other amount as may be imposed by the FSC.

The Capital Rules explicitly state that intangible assets, such as goodwill, cannot be included in capital calculations and must be deducted before assessing whether the VASP has adequate capital.

Own funding requirement

The own funding capital requirement that a VASP must maintain depends on the specific licence it holds, as outlined in the Capital Rules provided below for reference. If a VASP holds multiple licences, it must comply with the combined capital requirements for all licences it possesses.

It should be noted that banks that have obtained a VASP licence, are subject to additional capital requirements as specified in the BoM’s Guideline for Virtual Asset related Activities.

VASP	Amount
Issuer of ITO	sufficient working capital to be capable of meeting its debts as they fall due.
Virtual Asset Advisory Services	sufficient working capital to be capable of meeting its debts as they fall due.
Virtual Asset  Broker-Dealer	2,000,000 Mauritian Rupees or its equivalent in any other Fiat currency.
Virtual Asset  Wallet Services	sufficient working capital in fiat currency to continue business for a period of 12 months, based on realistic forecasts for the business in different market conditions (both negative and positive scenarios).
Virtual Asset Custodian	5,000,000 Mauritian Rupees or its equivalent in any other fiat currency
Virtual Asset Market Place	6,500,000 Mauritian Rupees or its equivalent in any other fiat currency

Prudential requirement

A virtual asset service provider must, at all times, have in place prudential safeguards equal to an amount of capital which is at least the higher of the following:

1. one quarter of the fixed overheads of the virtual asset service provider over the preceding year, reviewed annually; and
2. the financial resources requirements as determined under the Virtual Asset and Initial Token Offerings Services (Risk Management) Rules 2022.

An application for a banking licence is made by submitting a duly filled-out and prescribed application form to the BoM. The application must be accompanied by the relevant supporting documents as required under the Banking Act (including amongst others, a business plan giving the nature of the planned business, organisational structure and internal control and projected financial statements including cash flow statements).

Within 30 days of receipt of the application, the BoM will notify the applicant in writing whether or not the application is complete or if supplementary information or documents are required.

The BoM may grant an in-principle approval, subject to such terms and conditions it deems necessary to make a final determination on the application. However, an in-principle approval must not be construed as an authorisation to conduct banking business or to have any legitimate expectation of a positive final determination of the application. The in-principle approval will automatically lapse if the applicant does not satisfy the terms and conditions attached to such approval.

The BoM will give notice of its determination to the applicant within 60 working days of receipt of a complete application or of the supply of any supplementary information called for by the BoM.

Cross-border activity is permissible. There are no specific requirements to conduct cross-border activities from a Mauritius law perspective as long as it falls within the objects of the licence and are in conformity with the BoM guidelines on Cross-Border Exposure.

A bank must be a body corporate. It can be a stand-alone entity incorporated under the Companies Act 2001 of Mauritius or in the case of a foreign bank a branch, a subsidiary or a joint venture. It is strictly prohibited to operate a shell bank in Mauritius.

The Banking Act provides that the board of directors of a bank must consist of at least 5 natural persons, 40 per cent of which must be independent directors. The BoM may, having regard to the size, complexity and ownership of a bank, require the bank to have more than 40 per cent independent directors with the prior approval of the BoM. The  board must collectively possess the necessary qualification and background for a balance of expertise, skills, and adequate knowledge of its business/structure and strengths of the industry, as well as of the regulatory framework.

In addition, the Banking Act requires the board of a bank to establish  committees to discharge their responsibilities effectively. The committees should cover at least the following: audit committee, conduct review committee, risk management committee, and nomination and remuneration committee. The mandates of each committee must be clearly set out and be publicly available. Proceedings of the sub-committees must be reported peri-odically to the board.

In its supervisory role, the BoM issued a Guideline on Corporate Governance (revised in October 2017) to provide further guidance on the implementation provisions set out in the Banking Act. The guideline provides for principles and related requirements that aim at placing reliance on an institution’s internal processes and controls by:

• an effective board of directors’ oversight;
• strong risk management;
• directors’ relationship with the senior management;
• effective internal and external controls;
• transparency; and
• compliance.

In addition, the Code of Corporate Governance 2016 and the Code of Ethics and Code of Banking Practice issued by the Mauritius Bankers Association provide guidance to the board of directors in complying with governance practices.

The Banking Act provides that a bank must not employ any person whose remuneration is linked to the income of the bank or to the level of activities on customers’ accounts.

Except with a dispensation from the BoM, every bank must appoint a Nomination and Remuneration Committee, consisting of a majority of non-executive directors. The role of this committee will consist of, amongst other things:

1. recommending to the board candidates for board positions, including the chair of the board and chairs of the board committees;
2. recommending criteria for the selection of board members and criteria for the evaluation of their performance;
3. preparing, for the approval of the board, the remuneration and compensation package for directors, senior managers and other key personnel, taking into account the soundness of risk taking and risk outcomes as well as any relevant information available on industry norms;
4. recommending to the board an incentive package, as necessary, to enhance staff performance, while ensuring that incentives embedded within remuneration structures do not incentivise staff to take excessive risk;
5. recommending nominees for board committees; and
6. commenting on the contribution of individual directors to the achievement of corporate objectives as well as on the regularity of their attendance at the board and committee meetings.

Banks are encouraged to consider the use of contractual provisions to allow them to reclaim incentive components of remuneration from executive directors and key management personnel in exceptional circumstances of misstatement of financial results or of misconduct resulting in financial loss to the banks.

With a view towards promoting transparency to shareholders, depositors and other market participants, the guideline also states that the board of directors of a bank is recommended to disclose the remuneration/fees of directors, senior executives and key employees. The disclosure should be timely, accurate, clear and easily understandable to inform all stakeholders effectively.

The BoM implemented Basel III in June 2014 through publication of the Guideline on the scope of application of Basel III and eligible capital (Basel Guideline). When the Basel Guideline was issued, banks faced minimal disruption, as 90% of the banks’ capital base was already Tier 1. Alongside capital adequacy requirements, the BoM introduced a capital conservation buffer, starting at 0.625% in 2017 and increasing annually until reaching 2.5% by 2020.

To control risk in certain high-growth economic sectors, the BoM replaced the Basel III counter-cyclical capital buffer with macro-prudential measures, including additional portfolio provisions, higher risk weights, debt-to-income limits and loan-to-value ratios. Since July 2018, the loan-to-value ratio requirement has been removed.

Banks licensed in Mauritius must meet capital ratio requirements set out in the Basel Guideline at two levels:

1. the bank standalone (“solo”) level, which measures a bank’s capital adequacy based on its own capital and risk profile; and
2. the consolidated (“group”) level, which includes the bank’s subsidiaries but excludes insurance or non-financial activities.

Total regulatory capital of banks must consist of the sum of the following elements:

1. Tier 1 capital (going-concern capital), which comprises of (i) Common Equity Tier 1 and (ii) Additional Tier 1 Capital
2. Tier 2 Capital (gone-concern capital)

For capital adequacy, banks must maintain:

1. 6.5% of risk-weighted assets as common equity Tier 1;
2. 8% of risk-weighted assets as Tier 1 capital; and
3. 10% total capital (Tier 1 plus Tier 2), exclusive of the capital conservation buffer.

Banks classified as D-SIBs are subject to additional capital requirement. In line with the recommendations of the Basel Committee on Banking Supervision (BCBS), the additional loss absorbency requirement of D-SIBs will have to be met with Common Equity Tier 1 (as defined by the Basel III framework). This additional capital will be in the form of a surcharge for D-SIBs and will be included as a special category in the computation of the capital adequacy ratio under Basel III.

No requirements regarding the BCBS’ leverage ratio have been determined in Mauritius. However, banks are required to comply with other prudential guidelines issued by the BoM.

All banks licensed by the BoM are required to comply with its Guideline on liquidity risk management (LCR Guideline), which includes maintaining a liquidity coverage ratio (LCR). The LCR ensures that banks hold sufficient high-quality liquid assets (HQLA) that consist of cash or assets convertible into cash at little or no loss of value in the market, in order to meet their liquidity requirements for a 30 days’ liquidity stress period – by which time, banks and the  BoM will be able to take appropriate corrective action to resolve the stress situation in an orderly manner. The liquidity coverage ratio has two components:

1. the value of HQLA under stressed conditions; and
2. total net outflows, as defined by the BoM’s parameters outlined in the guideline.

If a bank’s LCR falls below 100% during financial stress, it must notify the BoM within one business day, justifying the HQLA use and outlining corrective steps.

To complement its LCR Guideline, the BoM introduced the Net Stable Funding Ratio (NSFR) Guideline in 2024. This guideline requires that banks maintain a Net Stable Funding Ratio of at least 100% to promote long-term financial stability. It ensures that banks have adequate stable funding relative to their assets, minimizing dependence on short-term funding and mitigating liquidity risks. The NSFR Guideline outlines the methodology for calculating and monitoring the NSFR, specifying requirements for various types of liabilities and assets.

In Mauritius, banks have access to various funding sources provided by the BoM. These facilities are designed to manage liquidity and ensure financial stability within the banking system.

The primary sources include:

1. Reserve Requirement: For example, as of 27 January 2023, the computation of the Cash Reserve Ratio  on both the Mauritian rupee and foreign currency deposits has been lengthened from 14 to 28 days to enable banks to better manage their liquidity.
2. Open Market Operations: The main instrument is the 7-Day BoM Bill, which the BoM issues every Friday. The 7-Day BoM Bill is issued at a fixed-rate equal to the “Key Rate” and on full allotment basis. This ensures that the amount of liquidity remaining in the system is in line with the demand for reserve money by banks, thus helping to anchor short-term money market rates at around the “Key Rate”. For information, the “Key Rate” is the principal policy interest rate determined by the Monetary Policy Committee of the BoM.
3. Treasury Bills and Government Securities: The BoM issues Treasury Bills and other government securities and banks can invest in these instruments for liquidity management and as secure investment options. The BoM may also conduct buybacks of BoM securities in case the liquidity in the system turns short. These buybacks are carried out through competitive auctions.
4. Interest Rate Corridor and Standing Facilities: The BoM maintains a symmetric interest rate corridor of 200 basis points around the “Key Rate” through standing facilities. Banks with excess liquidity or shortage of liquidity may use the standing facilities to clear their liquidity positions.
5. Other Operations: The BoM uses other form of instruments, such as foreign currency swaps and bilateral operations, as part of its monetary policy toolkit.

Yes, all financial institutions are required to prepare audited financial statements for the financial year. These statements must be published in the Gazette¹ and on the institution’s website. If the institution does not have a website, the statements must be published in three daily newspapers approved by the BoM.

Furthermore, all financial institutions are also required to submit monthly interim reports in the form of a statement to the BoM, detailing the assets and liabilities of all their offices and branches in Mauritius.

Footnote(s):

¹ The Gazette is considered as the sole official publication of all enactments and public notices under the Seal of Mauritius.

Yes, consolidated supervision exist in our jurisdiction. Aligned with the BCBS, the BoM has taken initiatives to enhance its supervisory process, specifically with the endorsement of risk-based and consolidated supervision, and guidelines have been updated to accord with international best practices.

The Banking Act was also amended to allow for consolidated supervision of banking groups.

There are no reporting or approval requirements for acquiring shares in or gaining control of a bank unless the acquisition or control constitutes obtaining (directly or indirectly) a “significant interest” in the bank. The Banking Act provides that anyone seeking to acquire or increase control in a bank to the level (directly or indirectly) of a “significant interest” must seek the BoM’s prior approval.

A “significant interest” means:

1. owning, directly or indirectly, alone or together with a related party, or otherwise having a beneficial interest amounting to, 10% or more of the capital or of the voting rights of a financial institution;
2. having the ability, directly or indirectly, alone or together with a related party, or having the power, to appoint 20% or more of the members of the board of a financial institution; or
3. directly or indirectly exercising a significant influence over the management of a financial institution as the BoM may determine.

Any acquisition in contravention with the Banking Act will be deemed null and void and not entitled to any voting rights or payment of dividends. The BoM’s Guideline on Corporate Governance requires that banks regularly review and update the BoM on their ownership structures, especially regarding changes to significant shareholders or other influential parties.

As mentioned above, anyone seeking to acquire or increase control in a bank to the level (directly or indirectly) of a “significant interest” must seek the BoM’s prior approval.

Prospective owners of significant interest over a bank must give 30 days’ prior notice to the BoM, including (among other things):

1. the acquirer’s name, personal history, business background and experience and that of any other person by whom or on whose behalf the acquisition is to be made – this must also be accompanied with a certificate of good conduct issued by a competent authority (or an affidavit duly sworn stating any convictions for crimes and any past or present involvement in a managerial function in a body corporate subject to insolvency proceedings or having declared personal bankruptcy, in respect of each of the persons);
2. the financial position of that person and any other person by whom or on whose behalf the acquisition is to be made;
3. the terms and conditions of the proposed acquisition;
4. the identity, source and amount of the funds or other consideration used or to be used in making the acquisition; and
5. any plans of the acquirer regarding liquidation, asset sale or merger with any company, or regarding making any other major change in its business, corporate structure or management.

The BoM may request additional information at its discretion.  Approval from the BoM depends on factors such as:

1. whether the proposed acquisition would create undue influence or a monopoly or would substantially lessen competition;
2. whether the financial condition of any acquiring person might jeopardise the financial stability of the financial institution or prejudice the interests of its depositors;
3. whether the competence, experience or integrity of any acquirer, or of any proposed director, chief executive officer or other senior officer, indicates that it would not be in the interest of the depositors of the financial institution or in the interest of the public to permit such person to acquire significant interest in the financial institution;
4. whether the proposed acquisition will not be conducive to the convenience and needs of the community or market to be served; or
5. whether any acquiring person fails to furnish the BoM with all the information that it requires.

There are no restrictions on foreign shareholdings in Mauritius.

In June 2014, the Bank of Mauritius introduced a Guideline for dealing with domestic-systemically important banks (D-SiBs), which set out the methodology for assessing the systemic importance of banks.

The Guideline’s objectives are:

1. to put in place a reference system for assessing the systemic importance of banks;
2. to assess the systemic importance of banks along the lines of the reference system;
3. to identify the potential systemically important banks; and
4. to ensure that the systemically important banks have the capacity to absorb losses through higher capital.

D-SiBs are required to maintain a capital surcharge ranging from 1.0 to 2.5 per cent, in addition to the capital adequacy ratio and the capital conservation buffer.

Depending on the nature of the violation of the banking laws the BoM can (by itself or – where applicable – upon an application to the relevant court) apply fines, sentence of imprisonment, suspension or even revocation of the banking licence.

Conservatorship

Under the Banking Act, the BoM may appoint a conservator (which may be the BoM or any other person directed by the BoM to be the conservator), where it deems necessary to protect the assets of a financial institution for the benefit of its depositors and other creditors, if the BoM has reasonable cause to believe that:

• the capital of the bank is impaired or there is threat of such impairment;
• the financial institution has, or its directors have engaged in, practices detrimental to the interest of its depositors or that the financial institution or its senior management officers have violated any provision of the banking laws, AML/CFT obligations or guidelines; and
• the assets of the financial institution are not sufficient to provide adequate protection to the bank’s depositors or creditors.

When a conservator is appointed, the latter takes full control of the bank and all of its property, books, records and effects. The conservator has all powers necessary to preserve, protect and recover any assets of the bank, and to collect all monies and debts due to the bank, assert causes of action belonging to the bank and file, prosecute and defend suits on its behalf.

Unless the BoM determines otherwise, there is a time constraint of 180 days on the conservator to rehabilitate the financial institution.

Voluntary liquidation

If a bank proposes to go in voluntary liquidation, it must obtain the authorisation of the BoM. Where the bank has received the authorization of the BoM to go into voluntary liquidation, the bank must:

1. immediately cease to do business, retaining only the powers to do the necessary business for the purpose of effecting an orderly liquidation;
2. repay its depositors and other creditors;
3. wind up all operations undertaken prior to the receipt of the authorisation.

The authorisation to go into voluntary liquidation must not prejudice the rights of a depositor or other creditor to payment in full of his claim nor the right of an owner of funds or other property held by the bank to the return thereof. All lawful claims must be paid promptly and all funds and other property held by the bank must  be returned to their rightful owners within such maximum period as the BoM may prescribe.

Compulsory liquidation

The BoM will appoint a receiver to manage and control a bank where it has evidence that the bank’s:

• capital is impaired or unsound;
• capital-to-assets ratio is less than 2%;
• business is unlawful, unsafe or unsound;
• continuance is detrimental to the interests of its customers; or
• licence has been revoked.

Duties and powers of a receiver

The receiver must commence the proceedings leading to the compulsory liquidation of the assets of the bank or take such other measures necessary in respect of the bank within a period of not more than 30 days, or must terminate the taking of possession.

During the receivership period, the receiver has a wide array of powers to:

• manage, control or discontinue the bank’s operation;
• stop or limit the bank’s payment obligations;
• initiate, defend and conduct any proceedings;
• suspend, in whole or in part, the repayment or withdrawal of deposits and other liabilities of the bank; and
• suspend or reduce the right of creditors to claim or receive interest on any money owed to them.

Priority of Claims

Claims against the assets of a bank during compulsory liquidation are settled in the following order of priority:

• necessary and reasonable costs, charges and expenses incurred by the receiver, including their remuneration.
• wages and salaries of officers and employees of the bank in liquidation for the three-month period preceding the taking of possession of the bank.
• taxes, rates and deposits owed to the Government of Mauritius.
• any premium contributions due and payable by the bank to the Mauritius Deposit Insurance Corporation Ltd.
• liabilities incurred by the Mauritius Deposit Insurance Corporation Ltd in respect of insured deposits, up to the amount of compensation paid or payable out of the Deposit Insurance Fund referred to in the Mauritius Deposit Insurance Scheme Act 2019.
• other deposits.
• other liabilities.

Winding-up of banks

A bank may also be wound up in accordance with the provisions of Sub-Part II of Part III of the Insolvency Act 2009 (Insolvency Act).

Section 100 of the Insolvency Act states that the winding-up of a company may be:

• by way of a winding-up order made by the court;
• by way of a voluntary winding-up commenced by a resolution passed by the company; or
• by way of a resolution of creditors passed at the watershed meeting.

Voluntary winding-up may be:

• a shareholders’ voluntary winding-up where the company is solvent, and where the liquidator is appointed at a shareholders’ meeting; or
• a creditors’ voluntary winding-up where the company is insolvent, and where the liquidator is appointed by a meeting of creditors.

With effect from the commencement of a voluntary winding-up, a liquidator is appointed and has custody and control of the bank’s assets.

Priority of claims

Section 91 of the Banking Act provides that, in the event of the winding-up of a bank, all assets of the bank must be made available to meet all deposit liabilities of the bank in the following order of priority:

• deposit liabilities incurred by the bank with its customers;
• deposit liabilities incurred by the bank with other financial institutions; and
• other liabilities of the bank.

The Mauritius Deposit Insurance Scheme which was established under the Mauritius Deposit Insurance Scheme Act 2019 to protect insured depositors of a bank by providing insurance against the loss of insured deposits and contribute to the stability of the financial system in Mauritius by ensuring that depositors have prompt access to their insured deposits, in the event of failure by a bank.

The scheme is administered and managed by the Mauritius Deposit Insurance Corporation Ltd, known as the agency. The agency’s powers and functions include, among others:

• the control and management of funds deposited into the deposit insurance fund;
• collecting premium contributions; and
• making payments of compensation in respect of insured deposits or otherwise providing depositors with access to their insured deposits.

Both local and foreign currency deposits are eligible, up to a certain level, to protection under the scheme. They must, however, fall under the following categories:

• deposits in savings accounts both in Mauritian currency and in foreign currencies;
• deposits in a current account both in Mauritian currency and in foreign currencies;
• time deposits both in Mauritian currency and in foreign currencies; and
• such other deposits or amounts as the board of the agency may determine.

Deposits not granted protection under the scheme include:

• where there is a contractual set-off agreement between a bank and a depositor, any deposit up to the amount of any debt owed by a depositor to the bank if such debt is matured or past due, or the maximum amount that would otherwise be eligible for compensation (whichever is lower);
• any deposit of a related party;
• any deposit that is frozen by a court order; and
• such other deposits or amounts as the board may determine.

The coverage limit per insured depositor is MUR 300,000 or such other amount as may be prescribed. If sufficient funds are recovered following the sale of the failing deposit-taking institution’s assets, the insured depositor may recover deposits of more than the coverage limited/insured amount.

The scheme is primarily funded by the premium contributions paid by banks and non-bank deposit-taking institutions. It also derives funding from interests or other income through investments made from the fund, subject to approval of the agency’s board. The financial safety net was reinforced with the setting up of the Mauritius Deposit Insurance Corporation Ltd as a fully owned subsidiary of the BoM in March 2024.

Mauritius has not yet implemented the Financial Stability Board’s “Key Attributes of Effective Resolution Regimes for Financial Institutions”.

Under the current legal regime, conservatorship is the principal means of resolving a failing or a likely-to-fail bank. Also, under the Bank of Mauritius Act 2004, the BoM may, in exceptional circumstances, grant advances to financial institutions – please refer to Question 25 for the conservatorship regime in Mauritius.

The BoM has not yet established a TLAC policy; however, banks must adhere to specific guidelines on capital adequacy (refer to Question 14 above), stress testing, and liquidity coverage (refer to Question 16 above). These guidelines align with the Basel Committee’s recommendations and are designed to ensure that banks can absorb losses while continuing to operate.

Every director or senior officer of a bank must, in the exercise of any of his powers and discharging any of his duties act honestly and in good faith and in the best interest of the bank and exercise care, diligence and skill that a reasonable and prudent person would exercise in comparable circumstances. No provision in any contract or in the constitution of a company or any resolution of a company will relieve any director or senior officer from the duty to act in accordance with the banking laws or from liability for breach thereof.

The Banking Act sets out the principles of a fit and proper person, which the BoM must be satisfied of at the time of approving the appointment and reappointment of directors and senior officers. The BoM also issued guidelines detailing the fit and proper criteria for the assessment of the fitness and probity of directors and senior officers.

In addition, Section 64(1) of the Banking Act requires senior officers and directors of banks to be bound by an oath of confidentiality in a form prescribed under the Banking Act.

In the dynamic landscape of global banking, Mauritius has recognised the increasing significance of digital transformation, environmental, social and governance initiatives, and cybersecurity enhancements. These goals are reflected in the financial sector and the BoM initiated various measures other the past years.

After a few years of incubation, the BoM Innovation Hub, the Innov8, was formally launched in September 2024. The Innov8 is the result of the collaboration with Le Lab of Banque de France and the Reserve Bank of India Innovation Hub. The Innov8, first of its kind in Africa, provides a conducive environment to promote the development and testing of innovative solutions for the financial services sector under controlled conditions. The BoM has encouraged other central banks in Africa to join this initiative and share their problematics.

Furthermore, the BoM has reiterated its position to focus on sustainability. Marking the third year of establishment of the Climate Change Centre, the BoM’s efforts were geared towards capacity building including the development of a macro climate framework comprising bespoke macroeconomic toolkits for assessing the manifold ramifications of climate change on price, economic and financial stability. These macroeconomic projections will feed into the monetary policy aspect going forward and will also become an input in stress testing models of the BoM and those of commercial banks to assess resilience to different physical and transition shocks.

Based on the recommendations of the Network of Central Banks and Supervisors for Greening the Financial System (NGFS), the BoM introduced a guideline Climate-related and Environmental Financial Risk Management to assist financial institutions in embedding sound governance and risk management frameworks for climate-related and environmental financial risks within their existing risk management frameworks. The implementation of the measures was fixed to the 31 December 2023. This framework helps financial institutions to better understand, identify, assess, monitor and mitigate these risks. Financial institutions will be in a better position to identify the risks and opportunities arising from the transition to a low-carbon and more circular economy and consider them in their strategy, engagement with their counterparts and other decision-making processes. Further development on that front are expected as measures and reportings are now in place.

On cybersecurity, the BoM published a guideline on Cyber and Technology Risk Management  in 2023 setting out the minimum requirements which banks and payment service providers are expected to implement with respect to cyber and technology risk management to ensure that the risks are well understood and managed appropriately. In addition to the minimum requirements, banks and payment service providers shall consider implementation of encouraged measures set out in the guideline as well as standards in relevant international guidance documents, such as, the National Institute of Standards and Technology (NIST) Cybersecurity Framework, the Control Objectives for Information and Related Technologies by ISACA and other relevant ISO standards as well as other best practices. Banks and payment service providers shall implement a cyber and technology risk management framework commensurate with the size, nature and complexity of their activities, services and underlying technologies. This guideline is largely based on the guidance on Cyber Resilience Oversight Expectations for financial market infrastructures issued by the European Central Bank in December 2018. Financial institutions were expected to submit their  first reports to the Bank by end November 2024.

The biggest challenges faced by Mauritius and its financial sector remain the rising inflation rate, the depreciation of the Mauritian rupees and the excess liquidity on the market. With the new regime and the new governor of BoM in place, major developments are expected in the upcoming Finance Act this year.