New banking laws will empower finance minister to regulate banking charges

Martin Endjala

The Bank of Namibia (BoN) is on the verge of introducing the Banking Institutions Act of 2023 (Act 13 of 2023), and the Payment System Management Act of 2023 (Act no. 14 of 2023), which will empower the Minister of Finance and Public Enterprises to make regulations relating to fees and charges imposed by banking institutions on their clients.

While announcing this yesterday, BoN Acting Director for Strategic Communications and International Relations, Sandra Garises, said service charges by banking institutions on their clients have been receiving the public and the legislature’s attention, which prompted the government to draft laws to regulate the fees.

“High banking fees and charges have become a major concern, receiving public and parliamentary attention. The new Banking Institutions Act has also introduced a provision empowering the Minister of Finance and Public Enterprises to make regulations relating to fees and charges imposed by banking institutions on their customers. As standard practice, these regulations will be issued in consultation with the banking industry to ensure that financial stability is not compromised,” she said.

Garises said, these laws have introduced a world-class regulatory and supervisory system, demonstrating the country’s commitment to delivering responsive and transformed banking services. Therefore, Namibia has taken significant steps towards a more efficient and modern banking sector with the implementation of the said laws.

Adding that the new regulations will also require Namibian banking institutions to have independent and autonomous Boards that oversee effective governance, transparency and accountability which is essential for a stable and sound financial system. The effective board succession plans will also prioritise term limits and age to prevent board members from overstaying while ensuring proper oversight in line with the fiduciary function of the Board of Directors.

“Furthermore, the new regime is predicated on embedding local decision-making in the best interest of the Namibian people, who have been loyal patrons of banks and have helped them thrive over the years as successful businesses. In this regard, credit decisions and approvals should be done by persons the Bank of Namibia has authorised and found fit and proper locally.

No credit decisions should be taken outside Namibia by persons neither authorised nor found as fit-and-proper by the Bank to run the affairs of a Namibian banking institution. The sector needs to be responsive and transformed to avoid collision with Namibian society,” she warned.

She noted that the Banks were also informed that the BoN will not entertain profit shifting and transfer pricing practices, which are done via Service Level Agreements with the parent institution.

“The recently introduced Acts shall prioritise the stability of the financial system above all else while realising Namibia’s aspirations of inclusivity in the financial system and transformation. Our financial system is on a proverbial fork road. Operating models that achieved success in the past, may not do so in the future.

I believe this new regulatory and supervisory framework, the Bank, as regulator and supervisor, and the entire industry shall work in tandem to bring about a responsive and dynamic financial ecosystem that maximises shareholder value while serving the national interest,” she concluded.

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