Part IV of the Banking Act (Cap46.04). (Banking Act), covering ‘Financial Statements, Audit and Supervision’, establishes the framework through which banks in Botswana are supervised by the central bank. This is to ensure that banks are managed responsibly, in a manner that maintains public confidence and supports financial stability.
The principal components of this supervisory framework are:
- Banks must keep proper financial records, sufficient to explain their financial position in a manner that demonstrates that they have complied with the provisions of the Banking Act.
- Annual accounts must be produced within three months of the end of the financial year.
- Monthly statements of assets and liabilities must be provided to the central bank.
- The Bank of Botswana may impose additional duties on banks’ auditors to obtain additional information that it may consider necessary; auditors are required to disclose to the central bank any breach of the Banking Act or other relevant legislation.
- At least once a year, the Bank of Botswana arranges trilateral meetings with each bank and its auditors as well as bilateral meetings to review the financial operations and strategies of banks.
- The Bank of Botswana conducts regular on-site examinations of all banks under its supervision (including, if necessary, any foreign branches). Special examinations can be undertaken if application is made by at least one fifth of a bank’s depositors, or by depositors holding not less than one third of the bank’s liabilities to the public in Botswana.
- If an examination reveals that a bank is operating in an unlawful or unsound manner, the Bank of Botswana can require the affected bank to take necessary steps to address the situation. If necessary, the Bank of Botswana may appoint persons with the necessary experience to rectify the situation.
- Each year, the Bank of Botswana prepares Banking Supervision Annual Report for submission to the Minister of Finance and Economic Development.