Botswana: Financial Sector Assessment Program-Detailed Assessment of Observance—Basel Core Principles for Effective Banking Supervision

International Monetary Fund

No 2024/062, IMF Staff Country Reports from International Monetary Fund

Abstract: This paper presents Botswana’s Detailed Assessment of Observance—Basel Core Principles for Effective Banking Supervision report. Legislative changes for safeguarding operational independence are needed. The supervisory methodology and bank-rating framework requires a review to be a forward-looking assessment of risk. The supervision approach can be strengthened with greater use of qualitative information as inputs for offsite analysis together with a shorter onsite examination cycle. The capital adequacy framework for banks is largely aligned with the Basel framework and proportionate to the risks and complexities of the local banking industry, with minimum capital requirements being set significantly higher than under the Basel framework. The supervisory approach to management of problem assets, provisions and reserves by banks needs revision. There is a need to develop guidance for supervisors and supervisory methodologies to encourage higher standards of liquidity risk management. Material deficiencies exist in relation to regulations for corporate governance.

Keywords: IMF-World Bank Financial Sector Assessment Program; Botswana accountancy oversight authority; banking supervision department; amendment Act; asset liability management committee; Market risk; Credit risk; Bank risk management; Operational risk; Liquidity risk; Global; External audit (search for similar items in EconPapers)
Pages: 239
Date: 2024-03-05
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