BANKING SYSTEM OF SEYCHELLES

Over 37 years, the banking sector in Seychelles has changed out of all recognition as institutions have responded to the rapid development of the economy. With a population of just over 80,000, Seychelles is served by six commercial banks. All the commercial banks are regulated by the Central Bark in Independence Avenue, Victoria and are required to renew their licenses annually. Barclays was the first bank to open a branch in Seychelles in the late 1950s. Before that, banking was effectively handled by the local trading company Temoljees. The latest bank to achieve commercial status was the Seychelles Savings Bank (SSB) in May 1998. Under the Savings Bank Act, the bank’s lending was limited to small amounts for individuals but, under the Financial Institutions Act, it is free to provide working capital for corporate clients.
Seychelles has a highly sophisticated banking system similar to that found in most developed countries with most Seychellois having access to their own bank account, automatic teller machines, credit and debit cards. All types of account are available including current, fixed deposits, call deposits, savings schemes, loan accounts, and all major credit cards are represented. The SSB is keen to introduce a range of services to enable transactions to be undertaken without the need for visiting the bank.

Central Bank of Seychelles
The Central Bank of Seychelles was established on January 1, 1983 when it took over the functions and responsibilities of the Seychelles Monetary Authority. Prior to that, there existed a currency commission made up of two members, the Financial Secretary and the Accountant General. The currency commission was set up under the Seychelles Currency Act of 1974 to manage the currency issues and functioned like any other currency board, with the Treasury acting as agent. Its operations were mainly those of an automatic currency exchange based on a fixed rate against the pound Sterling. The Commission, however, could not formulate or conduct monetary and credit policies in the furtherance of economic development, nor act as the lender of last resort. Neither was it equipped to supervise the banking system.
With the growth of tourism in the second half of the seventies, Seychelles entered a period of prosperity, evidenced by large foreign exchange earnings. The banking system also underwent a rapid expansion. In 1976, the Seychelles Government invited a mission from the International Monetary Fund (IMF) to study the financial situation in Seychelles and to recommend improvements to the country’s financial structure. The IMF' s recommendation convinced the government that a central monetary authority was needed to regulate money supply, to supervise the banking system and generally to foster financial condition conducive to orderly and balanced development. However, given the relatively rudimentary structures and the lack of indigenous technical expertise, the IMF recommended that a monetary authority be set up as an interim measure. The Seychelles Monetary Authority (SMA) was thus established on December 1, 1978 under the Seychelles Monetary Authority Decree. Simultaneously, the Seychelles Currency Act 1974 was repealed and the Currency Commission abolished. The SMA functioned very much like a Central Bank. It issued currency, managed the external reserves, acted as a banker and fiscal agent of the government, managed the public debt, functioned as banker and leader of last resort to banks.
The conversion of the Seychelles Monetary Authority into a full-fledged central bank was achieved through a gradual process of evolution. In his budget address for 1983, the President stated that "..the Monetary Authority has reached a stage where it is performing virtually all the functions of a central bank and it is therefore the intention of the Government to convert the SMA into the Central Bank of Seychelles in the new year".
By 1982 the Monetary Authority had taken over from Barclays Bank International Ltd now Barclays Bank (Seychelles) Ltd, full responsibility for the day to day operations of the main central government accounts. On December 29, 1982, the Central Bank of Seychelles Act was enacted, providing for the establishment of the Central Bank of Seychelles with effect from January 1, 1983.

Financial Institutions Operating
The commercial banking sector is presently made up of the following:

- Barclays Bank (Seychelles) Ltd.
- Mauritius Commercial Bank (Seychelles) Ltd.
- Bank of Baroda.
- Habib Bank Limited.
- Seychelles International Mercantile Banking Corporation (SIMBC) trading under the name "Nouvobanq".
- Seychelles Savings Bank.

The first four commercial banks are all branches of foreign banks. The Seychelles International Mercantile Banking Corporation (SIMBC) was set up on August 2, 1991. It is the islands’ first locally-incorporated commercial banking institution, and is a joint venture project with the Standard Chartered Bank Africa PLC 22 per cent. The SIMBC, which trades under the name Nouvobanq, offers similar services to other commercial banks, and operates under the legislative controls outlined in the Financial Institutions Act as administered by the Central Bank of Seychelles.
Most recently the Seychelles Savings Bank, a government owned institution attained commercial status. Up till then its main purpose was to provide savings facilities for private individuals thus encouraging personal savings.