New banking bill to criminalise pyramid schemes …restricts foreign ownership

WINDHOEK - Newly proposed banking legislation will limit foreign ownership to 75 percent while the remaining 25 percent should be allocated to qualifying Namibian nationals.

The Banking Institutions Bill also criminalise illegal financial schemes pyramid schemes'' and strengthen failing banking institutions.

The Bill has in principle already received the approval of Cabinet. At a press briefing, Minister of Information and Communication Technology Stanley Simataa yesterday stated Cabinet authorise the Minister of Finance Calle Schlettwein to table it in the National Assembly, after scrutiny by the Cabinet Committee on Legislation (CCL).

Expanding on what the Bill involves, Ministry of Finance Executive Director Erica Shafudah stated the proposed foreign ownership of 75 percent percent will not be applicable to existing banking institutions.

The Bill also puts an obligation on a banking institution that has not met the 25 percent local ownership requirement at licensing stage to submit a plan on how it would fulfil the required 25 percent local ownership, stated Shafudah.

The executive director said the proposed changes in ownership of banking institutions is in line with the Namibia financial sector charter, a voluntary charter in which financial institutions make a voluntary commitment regarding the transformation of the economy.

In all, the Bill seeks to, among others, consolidate the laws relating to banking institutions, protect the interest of persons making deposits with banking institutions, provide the authorization, supervision and regulation of banking institutions, micro finance banking institutions and controlling companies. The Bill will prohibit and criminalise illegal financial schemes and provide for regulations of the ownerships of the banking institutions.

On resolution powers of the bank, Shafudah said Namibia currently does not have a clear or effective statutory regime specifically tailored to deal with failing banking institutions. The Bill therefore seeks to strengthen the bank's resolution powers and provide the bank with 'stabilization powers' to transfer shares, property, rights and liabilities of a banking institution deemed to be failing but which is potentially worth rescuing, in whole or in part, as a going concern, said Shafudah.

On illegal financial schemes, the executive director said the current Act, sections 55A, prohibits pyramids schemes but the interpretation of the section proved that the practical application of this provision is cumbersome and problematic.

Therefore, to address the identified shortcomings, the concept 'illegal financial schemes' is introduced and clearly defined, illegal financial schemes are criminalized, the elements of such crime are clearly outlined and the bank is empowered to conduct investigation in respect of the suspected illegal financial schemes.

Source: New Era Newspaper Namibia