CHAPTER 46:04
BANKING

 

ARRANGEMENT OF SECTIONS

 

   SECTION

 

 

 

PART I
Preliminary

 

   1.   Short title

 

   2.   Interpretation

 

 

 

PART II
Licensing of Banks

 

   3.   Authority to transact banking business

 

   4.   Representative office

 

   5.   Investigation of unlicensed banking

 

   6.   Application for banking licence

 

   7.   Appeal to the Minister

 

   8.   Conditions for issuing banking licence

 

   9.   General conditions

 

   10.   Power to vary conditions of licences

 

   11.   Revocation and surrender of licences

 

   12.   Procedure in case of urgency

 

 

 

PART III
Capital Structure, Financial Requirements and Limitations

 

   13.   Capital requirements

 

   14.   Provision to be made for certain items

 

   15.   Specified investments to be maintained

 

   16.   Minimum liquid assets to be maintained

 

   17.   Limitations on specified operations and activities

 

 

 

PART IV
Financial Statements, Audit and Supervision

 

   18.   Financial records

 

   19.   Annual accounts

 

   20.   Returns

 

   21.   Central Bank may call for information

 

   22.   Audit

 

   23.   Audit committee

 

   24.   Examination of banks

 

   25.   Powers of examiners

 

   26.   Offences by principal officers, etc., and penalties

 

   27.   Powers of Central Bank after examination

 

   28.   Annual report

 

 

 

PART V
Responsibilities of Directors and other Officers of Banks

 

   29.   Fit and proper persons

 

   30.   Disqualification

 

   31.   Disclosure of interest by a director

 

   32.   Offences by directors and penalties

 

 

 

PART VI
Temporary Management by Central Bank

 

   33.   Conditions and procedure for temporary management

 

   34.   Duration of temporary management

 

 

 

PART VII
Winding-up and Judicial Management

 

   35.   Winding-up or judicial management of banks

 

   36.   Priority of deposit liabilities

 

   37.   Priority of different classes of deposit and other liabilities

 

   38.   Unclaimed monies or property after winding-up

 

 

 

PART VIII
Miscellaneous Provisions

 

   39.   Abandoned funds

 

   40.   Evidence in relation to banker's books

 

   41.   Methods of identification

 

   42.   Control of advertisements

 

   43.   Confidentiality of information

 

   44.   Identity of customers

 

   45.   Bank holidays

 

   46.   Hours of business

 

   47.   Acceptance of deposits by insolvent banks

 

   48.   Publication of information

 

   49.   Application of other laws

 

   50.   Personal liability of bank officers

 

   51.   Regulations

 

   52.   General penalties

 

   53.   Exemptions and exclusions

 

 

Act 13, 1995,
S.I. 53, 1995,
Act 9, 2013.

An Act to provide for the licensing, control and regulation of banks, and for matters incidental thereto.

[Date of Commencement: 6th November, 1995]

PART I
Preliminary (ss 1-2)

 

1.   Short title

   This Act may be cited as the Banking Act.

 

2.   Interpretation

   In this Act, unless the context otherwise requires-

   "affiliate", in respect of any bank, means any entity, corporate or incorporate, where 20 percent or more of any class of its voting shares or other voting participation is directly or indirectly owned or controlled by such bank, or is held by it with power to vote;

   "bank" means a company, incorporated in accordance with the provisions of the Companies Act, which is licensed under this Act to conduct banking business;

   "banking business" means-

 

      (i)   the business of accepting deposits of money repayable on demand or after fixed periods or after notice, as the case may be, by cheque or otherwise; and/or

 

      (ii)   the employment of deposits in the making or giving of loans, advances, overdrafts or other similar facilities, and in the making of investments or engagement in other operations authorized by law or under customary banking practice, for the account of, and at the risk of, the person or persons accepting such deposits, and includes the discounting of commercial paper, securities and other negotiable instruments, for the purpose of extending loans or other credit facilities;

   "Central Bank" means the Bank of Botswana established under the Bank of Botswana Act;

   "demand liabilities", means the deposits held by a bank which must be repaid on demand;

   "director" in relation to a bank includes any person, by whatever name called, who performs or is empowered to perform, substantially the same functions, in respect of that bank, as those performed by the director of a company;

   "foreign bank" means an institution incorporated in a country other than Botswana, and subject to a foreign jurisdiction, which is licensed to do banking business according to the laws of that country;

   "place of business" means any branch, office or agency (including a mobile agency) of a bank in Botswana, open to the public for the transaction of banking business;

   "principal officer" in relation to a bank in Botswana, means the chief executive officer, or other person, by whatever title he may be referred to, who is, subject to the directions of the board of directors, responsible for the day to day management of the affairs of the bank;

   "unsecured", in relation to loans, advances or credit facilities, means loans, advances or credit facilities granted without security; or, in relation to loans, advances or credit facilities granted against security, means any part of such loans advances or credit facilities which at any given time exceeds the market value of the assets comprising the security given, or which exceeds the valuation approved by the Central Bank whenever it deems that no market value exists for such assets.

PART II
Licensing of Banks (ss 3-12)

 

3.   Authority to transact banking business

   (1) No person shall transact banking business in Botswana without a valid licence issued by the Central Bank.

   (2) No person, other than a bank licensed under this Act, shall, without the prior approval of the Central Bank-

 

   (a)   use, in any language, the word "bank", "finance", "loan", "credit" or "savings", or any of its derivatives as part of the name, description or title under which he carries on his activities;

 

   (b)   use, as part of the name, description or title under which he carries on his activities, any word or term likely to indicate the nature of his activities to be those of a bank;

 

   (c)   make any representation, or use any word or term in any billboard, letterhead, notice or advertisement, indicating in any manner that he is carrying on the activities of a bank.

   (3) The provisions of subsection (2) shall not apply where the use of such word-

 

   (a)   is for the sole purpose of forming and incorporating a company with a view of applying for a licence under this Act;

 

   (b)   is included in the title of a staff association or similar organizations representing bank employees.

   (4) Subject to subsection (3) any person who contravenes the provisions of subsection (1) shall be guilty of an offence and liable to a fine of P2 500 for each day on which the offence occurs or continues to occur, and to imprisonment for five years.

   (5) Subject to subsection (3), any person who contravenes the provisions of subsection (2) shall be guilty of an offence and liable to a fine of P1 000 for each day on which the offence occurs or continues to occur, and to imprisonment for two years.

 

4.   Representative office

   (1) No foreign bank, shall, without the written authority of the Central Bank, establish a representative office in Botswana.

   (2) Subject to the provisions of sections 3 and 6, no representative office shall conduct any banking business in Botswana.

   (3) Any bank or representative office which contravenes the provisions of subsection (1) or (2) shall be guilty of an offence and liable to a fine of P2 000 for each day on which the offence occurs or continues to occur.

   (4) The Central Bank may at any time request information from a representative office concerning its operations in Botswana, and any representative office which fails, without good reason, to provide the information requested within a period of twenty one days from the date of receiving the request shall be guilty of an offence and liable to a fine of P5 000.

   (5) For the purposes of this section "representative office" in relation to a foreign bank means the office providing any financial or banking activities in Botswana on behalf of such foreign bank.

 

5.   Investigation of unlicensed banking

   (1) Where the Central Bank has reason to believe that a person is advertising for or soliciting deposits of money, or is transacting business in violation of section 3, it may, in order to ascertain whether that section is being or has been violated, immediately call for and inspect, or cause to be inspected, all books, minutes, records, cash, securities and any other documents in such person's possession or custody.

   (2) The Central Bank may retain any such books, minutes, records, cash, securities or other documents, giving to the custodian thereof a duly authorized receipt therefor.

   (3) At the earliest reasonable opportunity, the Central Bank shall notify the Minister of any action taken pursuant to subsections (1) and (2), stating the reasons therefor, and shall, not later than ten days after the completion of its investigation and review, report its findings to the Minister.

   (4) Any person who, without good reason, fails or refuses to comply with any request of, or instructions duly given by the Central Bank under this section, or who destroys or defaces records or otherwise supplies false or misleading information, or who makes any false entry or omits any statement or entry in such records, with the intention to deceive, shall be guilty of an offence and liable to a fine of P10 000 and to imprisonment for three years.

   (5) Where, upon investigation, the Central Bank determines that banking business is being transacted in violation of section 3, the Central Bank shall order such activities to be suspended forthwith.

   (6) Any person who contravenes any order of suspension given pursuant to subsection (5) shall be guilty of an offence and liable to a fine of P2 000 for each day on which the contravention occurs or continues to occur, and to imprisonment for three years.

   (7) The Central Bank shall make application to the High Court for directions in respect of the disposition of all monies, securities and other assets in the possession of an unlicensed person and obtained by him whilst transacting banking business in violation of section 3 or this section.

   (8) In giving directions under subsection (7), the High Court shall be concerned to ensure the speedy and efficient return of all assets to their respective owner or owners, and may, without prejudice to the generality of the foregoing, direct that such assets be transferred to the Central Bank for distribution to the depositors or owners concerned.

   (9) The provisions of subsection (7) shall be in addition to and not in derogation of any criminal liability of such person in accordance with this Act or any other written law.

 

6.   Application for banking licence

   (1) Every application for a licence to transact banking business in Botswana shall-

 

   (a)   be made in writing to the Central Bank in such form as shall be determined by the Bank, and accompanied by such processing fee as may be prescribed; and the Central Bank shall cause such application to be published in the Gazette;

 

   (b)   be accompanied by certified copies of the applicant's certificate of incorporation in Botswana, the applicant's memorandum and articles of association, and such other corporate documents, financial documents and data, in English, as the Central Bank may require.

   (2) Within 30 days after it has received the application, the Central Bank shall inform the Minister that it has been received, and that it is being duly processed.

   (3) The Central Bank may call for such supplementary information as it may require, and shall conduct such investigation as it may deem necessary for the purpose of ascertaining compliance by the applicant with all applicable laws and regulations, including the provisions of this Act.

   (4) Every document and statement provided to the Central Bank as part of the application, including the supplementary information, shall be kept and treated by the Central Bank and any other authority or body concerned in the application process, in strictest confidence.

   (5) The applicant may appoint a representative in Botswana for the purpose of communicating with the Central Bank as part of the application procedure.

   (6) Within six months after receipt of the application, the Central Bank may reject it, or, subject to the provisions of this Act, and on payment of such fee as may be presribed, grant to the applicant a licence to transact banking business in Botswana, in either case giving written notice thereof to the applicant.

   (7) A licence issued under this section shall be renewable from year to year on payment of the annual prescribed fee.

   (8) Where the Central Bank issues an initial licence to a new bank it shall give notice thereof in the Gazette and at least two newspapers circulating in Botswana.

 

7.   Appeal to the Minister

   (1) The applicant for a banking licence may, upon receipt of notice of refusal of such application, and within six weeks thereof, appeal to the Minister, in such manner and form, and on payment of such fee, as may be prescribed.

   (2) Where the Minister considers it desirable, and before reaching his own decision, he may ask the Central Bank to review its decision, and the Central Bank shall do so within a period of one month from the date of the Minister's request.

   (3) Within three months after the lodging of such appeal, and where necessary after considering any review by the Central Bank, the Minister shall decide whether the appeal should be upheld or rejected, and his decision shall be final and not subject to review or further appeal.

 

8.   Conditions for issuing banking licence

   (1) No applicant shall be granted a licence unless it is incorporated under the Companies Act and limited by share capital, and the Central Bank is satisfied that it is a fit and proper recipient of a banking licence, and complies with such requirements as may be prescribed.

   (2) The Central Bank may refuse to grant a licence where the applicant intends to operate under a name which-

 

   (a)   so resembles that of an existing bank as to be likely or calculated to deceive the public;

 

   (b)   is so calculated as to suggest falsely a connection with a person or authority outside Botswana; or

 

   (c)   is calculated to suggest falsely a special status in relation to the Government or any public body in or outside Botswana, or that the applicant enjoys the official support or patronage thereof.

   (3) The Central Bank may, after consultation with the Minister, determine different minimum prudential requirements for different classes of banks, and shall impose such restrictions as it may deem necessary on the structure of business, operations and banking services to be provided by any such class of banks.

 

9.   General conditions

   (1) A licence issued by the Central Bank shall be subject to such conditions as the Central Bank may, from time to time, determine.

   (2) No licence granted by the Central Bank under this Act shall be transferable, in any way, without the prior written approval of the Central Bank.

   (3) Every bank licensed under this Act shall at all times display, in a conspicuous place in the public part of its principal place of business, and in any other office or branch or site, including a mobile site, a certified copy of the licence granted by the Central Bank.

   (4) No bank shall carry on banking business in any office or branch or site, including a mobile site, other than its principal place of business, without the prior written approval of the Central Bank.

   (5) No bank shall open or keep open or close or keep closed an existing place of business, or change its location, without the prior written approval of the Central Bank.

   (6) No bank shall establish a subsidiary in Botswana without the prior written approval of the Central Bank.

   (7) No bank shall, without the prior written approval of the Central Bank, establish a subsidiary, a branch or a representative office outside Botswana.

   (8) No bank shall, without the prior written approval of the Central Bank, use or refer to itself as, or transact business under, a name other than that under which it is licensed.

   (9) The Central Bank may draw up guidelines covering certain corporate aspects of banks licensed under this Act, including corporate amalgamation and certain transfers of property, other than in the normal course of business of such banks.

   (10) Any bank that contravenes or fails to comply with any of the provisions of subsections (2) to (7) shall be guilty of an offence and liable to a fine of P5 000 .

 

10.   Power to vary conditions of licences

   (1) The Central Bank may, by notice in writing to a bank, inform the bank that it proposes to impose, amend, add to, vary or cancel any condition attaching to the licence of the bank.

   (2) The bank may, within seven days of receipt of the notice specified in subsection (1), make representations in writing to the Central Bank.

   (3) The Central Bank may, after giving due consideration to any representation made under subsection (2), take such action in accordance with its proposals notified in accordance with subsection (1), and shall so notify the bank in writing.

   (4) The bank may, within fifteen days of receipt of the notice from the Central Bank, appeal to the Minister, in such manner and form as may be prescribed for the purposes of section 7.

 

11.   Revocation and surrender of licences

   (1)(a)   The Central Bank may revoke the licence of a bank where the bank in question-

 

      (i)   without the written consent of the Central Bank, fails to engage in the business authorized by the licence, within a period of twelve months from the grant of the licence;

 

      (ii)   is found to have ceased to transact the business authorized by the licence;

 

      (iii)   goes into liquidation or is wound up or is otherwise dissolved;

 

      (iv)   appears to the Central Bank to be carrying on banking business in a manner which is contrary to, or detrimental to, the interests of its depositors or the public;

 

      (v)   appears to the Central Bank to have insufficient assets to cover its liabilities to its depositors or the public;

 

      (vi)   has been convicted by

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