Non Bank Financial Sector Of Mauritius Finance Essay

Banks are the most of import establishments which are responsible in pull offing and procuring the wealth of the common adult male. The banking industry, whether public Bankss or private Bankss, are the most sure concern entities, where people deposit their difficult earned money for safety. However, there are other establishments which are bit by bit doing its presence felt in this field-Non-Bank Financial Institution.

Under the Banking Act 2004, “ non-bank sedimentation taking establishment ” means an establishment other than a bank that has been authorized by the cardinal bank to carry on sedimentation taking concern. Harmonizing to the Bank of Mauritius, the Non-Bank Deposit Taking ( NBDT ) Sector comprises establishments licensed by the Bank to raise sedimentations from the populace to fund leasing and loaning activities. They are governed by the same statute laws and ordinances as Bankss. NBDT establishments play an every bit of import function in fiscal intermediation by funding families and corporate establishments runing in cardinal economic sectors.

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3.2 Regulator of Non-Bank Financial Sector

The Financial Services Commission ( FSC ) of Mauritius was established as the incorporate regulator for the Non-Bank Financial Services Sector under the Financial Services Development Act 2001. With the passage of the Financial Services Act 2007, investing in Mauritius has been facilitated and the legal model modulating the non-banking fiscal services sector has been modernized. The FSC is the incorporate regulator for the industry and its remit encompasses those of the former regulative organic structures for securities ( Stock Exchange Commission ) , insurance ( Insurance Division of the Ministry of Economic Development, Financial Services and Corporate Affairs ) and planetary concern ( Mauritius Offshore Business Activities Authority ) .

The Commission therefore licenses, regulates and supervises Non-Bank Financial Institutions in Mauritius. The Non-Bank Financial sector includes establishments involved in Insurance & A ; Pensions, Capital Market operations, Leasing & A ; Credit Finance every bit good as Global Business activities.

The FSC is besides committed to the sustained development of Mauritius as a sound, stable and competitory international fiscal services Centre. Consequently, the Commission promotes the development, equity, efficiency and transparence of Non-Bank Financial Institutions and capital markets in Mauritius whilst guaranting the protection of investors.

3.3 Review of NBFIs Trends

In 2011, the FSC licensed 16 NBFI ‘s under the Financial Services Act ( FSA ) , 19 under the Securities Act ( SA ) and 694 under the Insurance Act ( IA ) , conveying the entire figure of other NBFI ‘s to 729, stand foring an addition of 7 % as compared to 2010.

The Non-Bank Deposit-Taking ( NBDT ) sector is comparatively little, stand foring about 5.6 per cent of banking sector assets at end-March 2012 compared to 5.7 per cent a twelvemonth earlier. Entire assets in that sector represented 16.8 per cent of GDP. The chief activities of Non-Bank Deposit-Taking Institutions ( NBDTIs ) comprise raising sedimentations and widening leasing and loan installations. Congruent to tendencies in the banking sector, activity of NBDTIs slowed down in the first months of 2012 partially as a consequence of hushed economic conditions.

On 8 February 2012, the figure of NBDTIs in operation in Mauritius has come down to nine. With the announcement of subdivision 12 ( 5 ) of the Banking Act 2004 in June 2007, NBDTIs are capable to the same prudential ordinances as Bankss. As such, over and above keeping a minimal capital of Rs200 million, they besides have to follow with the guidelines on Credit Concentration Risk and on Related Party Transactions. Furthermore, with consequence from 1 October 2009, they besides have to follow withthe Guidelines on Capital Adequacy Ratio ( CAR ) for NBDTIs by keeping a minimal CAR of10 per cent.

3.4 Mauritius Leasing Company Limited

The Mauritius Leasing Company Limited ( ML ) , the lone leasing company listed on the Stock Exchange of Mauritius, provides rentals for equipment, machinery, works, motor vehicles, tools, and other assets to industrial, agricultural, commercial, service sectors, the freelance, professionals and persons.

ML lays strong accent on quality merchandises, a dynamic selling scheme and efficiency and fight, which has allowed the company to capture 25 % of the leasing market.

The company is one of the most advanced leasing and investing concerns in Mauritius, with an impressive record which includes being:

The first leasing company in Mauritius ;

The first leasing company to be granted a deposit-taking license ;

The first leasing company to publish unsecured bond stocks in Mauritius, and

The first leasing company listed on the Stock Exchange of Mauritius.

3.4.1 Historical Timeline of Events of Mauritius Leasing Company Limited

Since its creative activity, Mauritius Leasing has led the field in Mauritius and developed a strong repute as an advanced, efficient and competitory company that focuses on presenting quality service to its clients.

1987 – The company incorporated as a joint venture between the Government of Mauritius and the local private sector, going the first company offering renting installations to concerns.

1990 – Milliliter became the first leasing company to publish unsecured bond stocks on the Stock Exchange of Mauritius.

1995 – Bank of Mauritius issued a license in 1995 authorising ML to carry on deposit-taking concern.

1997 -A new chapter unfolded in the history of ML when 75 % of the company was acquired by British American Insurance Co. ( Mtius ) Ltd.

2003 -ML pioneered the debut of the pre-approved leasing strategy, which received many awards and confirmed the company ‘s position as market leader. In December of the same twelvemonth, ML offered 75, 000,000 ordinary portions for sale to the populace. This determination was made by the Board of Directors to carry through the company ‘s future fiscal and operational aspirations, in peculiar to consolidate its capital construction, refund outstanding unsecured bonds, widen the stockholder base and increase overall fight.

2004 -In January, the offer was oversubscribed and a month subsequently Mauritius Leasing portions were successfully listed on the Stock Exchange of Mauritius – doing it the first publically listed renting company in the state.

2009 – The first to the full endorsed Shari’ah compliant Leasing option in Mauritius. The Mauritius Leasing Company Limited has initiated an Islamic leasing merchandise for both single and corporate clients as an option to traditional leasing. Called Ijarah, the merchandise has been approved by the Shari’ah board supported by local and Malaysia-based bookmans who are to the full versed in Islamic finance. Ijarah is an alternate to conventional leasing and is the ultimate signifier of interest-free asset-backed funding. It combines modern recognition and funding techniques with traditional hazard wages sharing constructs and concern moralss.

3.6 Finlease Company Limited

Finlease Company Limited, a member of the MCB Group, is the taking renting company in Mauritius. It offers a broad scope of renting solutions every bit good as fixed sedimentations remunerated at attractive rates.

Finlease Company Limited offers the undermentioned services:

3.6.1 Finance rental

Open to persons and companies, a finance rental is a flexible signifier of plus finance. While the legal ownership is vested with the lease giver ( Finlease Company Limited ) , you, as the leaseholder, have the option to buy the plus upon payment of a residuary value non transcending 10 % of the plus value.

3.6.2 Step up program

Step up program is specially tailored for immature professionals get downing out in their callings. Step up auto rental lets you drive the auto you want and adjust your refunds as you climb the calling ladder.

With the measure up refund program, people have the flexibleness to take:

Initial sedimentation sum

The measure up % addition over the refund program.

3.6.3 Operating rental

An operating rental contract is similar to a long term rental understanding. A typical contract involves the payment of equal monthly leases over a pre-defined period. Under the rental understanding, the client does non hold the option to buy the plus at the terminal of the lease period. A cardinal feature of an operating rental is that the economic life of the leased plus is non entirely paid off during the lease period. At the terminal of the rental period the plus is either sold out or leased out for a farther period.

Harmonizing to IAS17, it is the renting company that retains all the hazards and wagess of ownership of the plus and under current VAT statute law, runing rental leases are capable to VAT.

3.6.4 Deposits

Finlease Company limited offer attractive involvement rates on fixed sedimentations. The characteristics and benefits of fixed sedimentations at Finlease Company limited are as follows:

Minimal sum: Roentgen 500,000

Higher involvement rates than a nest eggs history

Fixed involvement rate over the term of the sedimentation

Wide scope of sedimentation footings available: 36, 48 and 60 months

Flexible involvement payment: monthly, quarterly, semiannual, annually or at adulthood day of the month

Interest paid by recognition to your history or by check

Deposits can be used as collateral for banking installations

3.7 Directors ‘ duties for the fiscal statements

The managers are responsible for the readying and just presentation of these fiscal statements in conformity with International Financial Reporting Standards and in conformity with the demands of the Mauritius Companies Act 2001 and the Financial Reporting Act 2004. They are besides responsible for such internal control as they determine is necessary to enable the readying of fiscal statements that are free from material misstatement, whether due to fraud or mistake.

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