Eight commercial banks that allegedly speculated on the foreign exchange market, hoarded forex or failed to adjust their exchange rates, will be slapped with monetary fines, Bank of Mauritius Governor Sarvesh Seegolam has been cited as announcing.
The announcement for sanction comes after Harvesh Seegolam accused these banks of ‘unpatriotic speculation’ – and will be effective after the approval of the Director of Public Prosecutions (DPP), Defi Media reported.
“Operators who do not adhere to good practices and who contribute to the dysfunction of the forex market will be severely punished. We have already started doing it,” he said.
None of the targeted banks were mentioned by name.
Besides the eight banks, four others reportedly received warning letters from the Central Bank after they were swift to adjust their exchange rates.
If they default again, a “monetary fine” will be imposed on them. Additional sanctions could also include “debarring persons from the financial industry.”
Forex market
Last year, the BoM had reportedly instructed all banks to ensure the proper functioning of the domestic forex market. Banks were required to comply with the BoM’s instructions that their exchange rates should be determined by market conditions.
At the opening of the Plenary Meeting of the Group of Francophone Banking Supervisors (GSBF) on 30 March, Harvesh Seegolam said: “We must protect not only consumers, but also the financial markets, especially in a volatile international context.”
On 31 March, the BoM intervened on the domestic foreign exchange market and sold a total amount of USD10.0 million at the rate of Rs45.50/USD.
Bankers unaware of sanctions, at a loss
According to Defi Media, questions are being asked in banking circles as to why they were informed on probable sanctions through the media.
As at 5 pm on Thursday, 30 March, several bank had reportedly not received any communication from the Bank of Mauritius.
“Certainly, we understand that speculation on the foreign exchange market is the main motivation of the Central Bank. However, we are yet to see what we are accused of. The Governor is bound to send a strong signal. He hits the banks as he is not able to hit at operators that retain forex. In any case, banks have a legal and ethical obligation to adhere to what the regulator says,” an unidentified banker was cited as saying.
Sources: L’Express, Le Mauricien, Defi Media
