Section 30: Limitation on investments and non-banking operations

30. Limitation on investments and non-banking operations (1) Subject to the other provisions of this section, no financial institution shall, except in the course of the satisfaction of debts due to it by the default of the debtor— (a) engage, whether on its own account or on the basis of a commission, in the wholesale or retail trade, including the import or export trade, or in any business other than the business for which the financial institution is licensed under this Act; (b) acquire or hold any interest in the capital of any financial, commercial, agricultural, industrial or other undertaking other than in respect— (i) of a purchase, for the account of a customer and without recourse, of shares or stock; (ii) subject to the approval of the central bank, of a shareholding in any undertaking the object of which is to insure deposits or promote the development of a money or securities market in Mauritius; (iii) subject to the approval of the central bank and to subsection (8), of a shareholding in any undertaking the object of which is to promote the economic development of Mauritius; [Issue 2] B3 – 24 Revised Laws of Mauritius (iv) subject to the approval of the central bank, of a shareholding in any other undertaking up to an amount which, in the aggregate, does not exceed 30 per cent of the financial institution’s current capital base, the shareholding being valued at its fair market value or, where it is not practicable to determine the fair market value, at a valuation approved by the central bank. (v) a shareholding of a bank licensed to conduct Islamic banking business or that unit of a bank carrying on Islamic business through a window for the purposes of enabling the bank or that unit to carry on Islamic banking business. (2) The central bank may prescribe the classes of investment permitted under subsection (1) (b) (iii) and the maximum investment that a financial institution may make in it, provided that such classes shall be so closely related to banking as to be reasonably incidental thereto. (3) (a) A bank engaging in factoring, promoting or managing a collective investment scheme or securities brokerage operations shall do so only through a subsidiary of the bank and in such a case, section 3 (3) shall apply to a subsidiary as it applies to a bank. (b) Subject to section 3 (3), a bank may engage in the sale of insurance policies or distribution of collective investment schemes or such other products as may be approved by the central bank. (3A) No bank shall engage in the business of providing operating leases. (4) A bank licensed under this Act shall not have a significant interest in another bank in Mauritius. (5) Subject to subsection (5A), a financial institution shall not purchase or otherwise acquire any immovable property or any right therein except as may be reasonably necessary for the purpose of conducting its operations or engaging in financial leasing of immovable property, including provision for foreseeable expansion, or for providing housing or other amenities for its staff. (5A) Subsection (5A) shall not apply to a bank licensed to conduct Islamic banking business or to that unit of a bank carrying on Islamic banking business through a window which purchases or otherwise acquires immovable property for the purpose of enabling that bank or that unit to carry on Islamic banking business. (6) Where a financial institution, in the course of the satisfaction of debts due to it, acquires any interest in the c on, or for providing housing or other amenities for its staff. (5A) Subsection (5A) shall not apply to a bank licensed to conduct Islamic banking business or to that unit of a bank carrying on Islamic banking business through a window which purchases or otherwise acquires immovable property for the purpose of enabling that bank or that unit to carry on Islamic banking business. (6) Where a financial institution, in the course of the satisfaction of debts due to it, acquires any interest in the capital of any undertaking or in any other property, movable or immovable, by the default of the debtor, it shall dispose of the interest without undue delay. (7) Notwithstanding subsection (1), a bank may invest an amount not exceeding 10 per cent of its current capital base in shares of companies listed on a securities exchange licensed under the Securities Act, subject to any such investment— (a) not being made by the bank directly or indirectly in its own shares; and B3 – 25 [Issue 3] Banking Act (b) not exceeding, in the aggregate, 5 per cent of the total shareholdings of any such company. (8) A bank may, for the purpose of participating in the equity capital of enterprises and subject to such investment not having the effect of impairing such capital adequacy requirements as may be imposed from time to time pursuant to section 20, set up or participate in an equity fund approved by the Financial Services Commission established under the Financial Services Act. (9) The central bank may exempt a bank, with respect to its banking business or investment banking business in currencies other than Mauritius currency, from compliance with subsections (1) (b) and (5) in so far as activities and operations referred to in those subsections are carried on outside Mauritius and do not involve the acquisition of any interest in movable or immovable property in Mauritius. [S. 30 amended by s. 156 (6) of Act 22 of 2005 w.e.f. 28 September 2007; s. 97 (1) of Act 14 of 2007 w.e.f. 28 September 2007; s. 2 (j) of Act 18 of 2008 w.e.f. 19 July 2008.]