Central Bank Announces Five Categories of Banks That May Be Licensed 


By Nkhosinathi Manyika

 

The Central Bank of Eswatini (CBE) has announced its plans to bring on board new banks into the country.

In an advertorial published in the Times of Eswatini, the CBE notes that prospects of onboarding new service providers in the banking sector remain in sharp focus.

The Bank states that this move is part of its current strategy which is meant to cast the net wide and attract qualifying and credible institutions.

The CBE has outlined five categories of banks that may be licensed in the country. It is worth noting that the maximum financial requirement to obtain a banking license is E50 million, while the minimum is E8 million.

Category A- Large Commercial & International Banks

Description- Category of banking license issued for banking operations which are either domestically owned or majority foreign-owned subsidiary companies with significant international banking interests.

Start-Up Capital: E50 million, which must be always maintained.

Permissible Activities: Permitted to engage in a wide range of banking activities, including international banking, maintaining accounts in major currencies, accepting deposits from non-residents, offering credit facilities, money transmission services, issuing means of payment, trading money, supporting safe custody of valuables and also be compatible with electronic banking and other services.

Category B- Medium-Sized Commercial Banks 

Description- These institutions, whether domestically owned or subsidiaries of foreign corporations with a 10% stake held by emaSwati or Eswatini-owned enterprises. Foreign ownership is capped at 90% of common stock in this category, which includes deposit-taking institutions, and was established to give credit and savings opportunities to small and medium-sized enterprises (SMEs), micro-industries, and marginalized populations in Eswatini. 

Start-up Capital: E30 million, which must be always maintained.

Permissible Activities: Allowed to engage in accepting deposits, lending, investing in financial securities, providing money transmission services, issuing means of payments, trading in money market instruments and they can also provide some services offered in Category A. 

Category C- Regional & Small Finance Institutions

Description- This type of banking license applies to deposit-taking institutions which are established to promote financial inclusion by giving credit to small businesses, remote and small farmers, micro and small industries, and other small to medium-sized market segments.

Start-up Capital: E8 million, which must then be always maintained.  

Permissible Activities: Allowed to engage in accepting deposits of up to E500,000 per depositor, conducting foreign exchange with approval, lending microfinance loans, making remittances, providing payment services, and other activities.

Category D- Restricted License Banks

  1. Wholesale Banks 

Description- A company or subsidiary whose common stock is majority owned by an individual Swati or Eswatini-owned parent company, with a foreign shareholding limited to 49%.

Start-up Capital: E30 million, which must then be always maintained.

  • Investment Banks 

Description- Banks that engage in public/ private offerings, issuer transactions, advisory and international finance.

Start-up Capital: E50 million, which must always be maintained. 

  • Digital Banks (also known as virtual banks, neobanks or online banks)

Description- Banks that deliver retail banking services through the Internet or other forms of electronic channels instead of physical branches.

  • Agents of foreign bank/representative

Description- Foreign financial institutions which cannot conduct banking business as a bank in Eswatini upon fulfilling certain prescribed conditions.

  • Agent of a locally incorporated bank 

Description- Must apply for an agent banking license to conduct banking business on behalf of a licensed financial institution in Eswatini. 

NB: For Permissible Activities under this category please visit www.centralbank.org.sz

Category E- Islamic Bank

Description- A sound Islamic bank shares the same hallmarks of a sound conventional bank, all of which are evaluated under the licensing criteria of this policy.

Start-up Capital: E8 million, which must then be always maintained.

Permissible Activities: Accepting Shariah-compliant money placements/ deposits for safekeeping without the need for security, offering Shariah-complaint financing products, managing unrestricted and restricted Shariah profits-sharing investment accounts, and providing money exchange and remittance services.   


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