Seychelles: Banking System
The banking system of the Republic of Seychelles is a state system of financial institutions. The structure of the banking system of Seychelles comprises the Central Bank of Seychelles and traditional commercial and offshore banking institutions. Additionally, the banking system includes specialized financial institutions and foreign exchange offices.
The history of the banking sector of the island nation starts in the 50-ies of the last century when the first banking institution has appeared. It was the first foreign representative office of the Barclays banking group (the UK). Today, the banking sector of Seychelles is represented by the major international banking groups and local banking institutions.
Banking system and legislation of Seychelles
The №14 “Financial Institutions Act”, which was adopted in the end of 2004, is the fundamental legislative act that regulates the activities of the banking institutions on the territory of the Republic of Seychelles.
Speaking about the state banking sector of Seychelles, it must be mentioned that since the last decades it has been developing alongside with the stable economic growth of the state. The diversification of the local economy and the development of the financial sector have actively contributed to the improvement of the banking sector. The foreign investments, which are continuously lured into the offshore zone, have become a basis for establishing a modern banking system that meets all the highest international standards.
The banking system of the Republic of Seychelles was created based on the experience of the most developed countries with the appropriate systems. Availability and provision of the following financial tools should be singled out among the main areas of the local banking activities:
- Issuance of the debit and credit cards;
- Bank account opening, including corporate and savings accounts;
- Depositing financial assets and other valuables;
- Storing material values and securities;
- Crediting trade operations and participation in the various investment projects.
The opportunities provided by a remote banking service are worth mentioning separately. The Seychelles banking institutions provide a possibility of accessing personal accounts remotely via the Internet. This service greatly facilitates the way of managing offshore companies and allows managing financial assets from any point of the globe. Today there is no need to visit a banking institution in order to use the full range of advantages of the financial banking services.
The Republic of Seychelles: Central Bank
The State Central Bank of Seychelles was established in the beginning of 1983. Since the time of its creation, the bank has been entrusted with the powers of the main financial institution of the island nation. The Currency Board was established in order to ensure the proper control and maximum assistance to the potential investors in the sphere of currency operations.
The main task of the Currency Board was to perform the functions of a supervisory authority in the field of monetary relations and to regulate the issuance of a national currency. However, such an approach to forming a state financial policy is long outdated.
In the mid 70-ies of the last century, the island nation was experiencing a revival of the tourism industry. The inflow of a foreign currency gave an impetus to the active development of the banking sector. The next year the country was visited by a special mission of the International Monetary Fund with the purpose of developing programmes for the improvement and development of the local banking sector. The mission has stated the reasonability of establishing a central authority that could balance and direct the further development of the banking sector.
As a result, the Seychelles Monetary Authority was organized. Simultaneously with the establishment of a specialized central fiscal authority, the law on the state foreign exchange control was abolished and the Currency Board was dissolved.
All the functions of the main state financial regulator were entrusted to the Monetary Authority. It was responsible for the management of the state currency reserves, issuance of the national currency and national debt management. The Authority performed functions of the Central banking authority and acted as the main governmental fiscal authority. It was also the ultimate lender to the banks, which were on the verge of bankruptcy.
The continuous development of the state banking sector has contributed to the transformation of the Monetary Authority into the main state financial regulator. In 1983, at the initiative of the President, the Monetary Authority was reorganized into the Central Bank of the Republic of Seychelles. Today, the Central Bank carries out its activities based on a legislative act, which was adopted in December 1982.
Seychelles: Banking Institutions
Several banking institutions must be singled out among the numerous modern financial organizations that comprise the banking sector of the Republic of Seychelles.
Representative offices of the foreign commercial banks:
- Barclays banking group;
- Bank of Baroda;
- Mauritius Commercial Bank;
- Habib Bank.
Local banking institutions:
- Seychelles Savings Bank;
- Seychelles International Mercantile Banking Corporation.
Besides, it should be noted that all the banking institutions, regardless of their residence status, and organizational form (whether it is a branch or a representative office of a foreign bank) are accountable for their activities to the Central Bank of the Republic of Seychelles.