Mauritius: Interview with Mr. Rundheersing Bheenick

Mr. Rundheersing Bheenick

Governor (Bank of Mauritius)

Mr. Rundheersing Bheenick

The setting up of the Bank of Mauritius marked the beginning of a new phase in the monetary history of Mauritius. Which is in your opinion, the real impact the Bank of Mauritius had in the country’s development?

 The role of the Bank of Mauritius in the country has been the role you would traditionally expect from any central bank. The difference is in the fact that we do not belong to any regional financial or monetary grouping. In other countries in Africa, you can find a regional group with a common currency. In the Caribbean for example, it is possible to find small islands sharing the Caribbean dollar. We are independent in respect of our own currency, which, for a long time, was pegged to the British pound. We unpegged it from the Pound Sterling and pegged it to the Special Drawing Rights (SDR) in 1976 on the advice of the IMF.  Following successive devaluations of the rupee by 22.9% in 1979 and 16.1% in 1981, the rupee was finally delinked from the SDR and pegged to a basket of currencies, which better reflected the trade pattern of Mauritius.  We then cautiously moved towards the suspension of exchange control in 1994, making the rupee a free-floating currency, which is where we are today.  We are one of the smallest free-floating currencies around the world, and the Central Bank has played a very significant role in trying to ensure monetary stability, exchange rate stability and price stability.  In recent times, we have garnered much success in our fight against inflation, bringing it resolutely down from double-digit figures to the current single digit rate of around 4%.  Our actions to maintain both macroeconomic and financial stability during the global financial crisis and the euro area sovereign debt crisis, have been recognized internationally. We keep working towards building the central bank of tomorrow with more attention to newly-identified areas of central bank actions like financial inclusion, macro prudential regulation and an increased developmental role.  A quick glance at our recent actions in the past two years bears testimony to our efforts to achieve our enlarged mandate.


In recent years, the country has shown an increase in the banking offer, with the arrival of new institutions and services. How does the Bank of Mauritius, with you as the governor, regulate its operations and right performance?

We are running quite a tight ship here in the banking sector as the number of banks we have is still small.  Mauritius as an International Financial Centre has enormous potential.  We need to materialise this vision by putting in place a conducive framework now.   We are open to new players but we are not open to anyone – we are very critical about which banks will be allowed to set up operations in the country, we examine their business model to see what they are bringing to the country in terms of product diversity . More importantly, we need to be careful about the investors whom we allow to own stakes in our banks. This is something we’ve done consistently over the years. We have a whole set of requirements which are strictly applied and guidelines that we periodically revise to better address risks in the banking sector.

We were ahead of the game when we introduced Basel II in 2009, which is something just a few countries in Africa have done.  We are now moving into Basel III.  The requirements we impose on our banks are usually higher than the prescribed regular standards.  For example, capital adequacy ratio recommended by the Basel Committee for Banking Supervisors was at 8%, we applied 10%.  These kinds of measures have contributed to a smooth transition to Basel III.  

We encounter no difficulty regarding surveillance over the sector; we inspect every bank on an annual basis, which is something only a few jurisdictions do. We do it from our own resources, with our own staff with an elaborated mechanism that allows us to maintain an on-going dialogue with banks and their external auditors, allowing these parties to talk to us directly, through trilateral meetings, generating more effective communication, and supervision.


The main concern of the Government of Mauritius is to develop the economic sectors and eliminate poverty. However, this can only be done through foreign direct investment, and by exploiting the country´s main advantages. As the mediator on the financial sector, how does the Bank of Mauritius contribute on this matter?

It has to do with the country’s reputation.  We would not be attracting much FDI to Mauritius if our country did not have a good reputation, nor would we not be attracting cross-border flows if our banks didn’t have a good reputation. This is the first contribution that the Bank of Mauritius makes.  Secondly, we have political and social stability; and this is complemented by the stability that the Bank of Mauritius provides, i.e. exchange rate stability, financial and monetary stability.    All these ingredients are critical for building the reputation of a solid jurisdiction where people want to establish enterprises and invest in.


You’ve mentioned that because of the market conditions, “Central Banking worldwide is trying to survive as an independent institution, which is not owned by national governments”. In order to achieve this, what are the current priorities and efforts taken by the Bank of Mauritius?

It is true that Government established the Central Bank in Mauritius in 1967, and that was before the country gained its independence.  However, when the country became independent, competition was low in the banking sector.  At that time, the Central Bank and Government took the wise decision to establish a parastatal bank to create competition.  Today, this bank is the second largest retail bank of the country.  In 1995, it was listed on the Stock Exchange of Mauritius, and the State reduced its shareholding to less than 30%.  This is an example where the Central Bank has participated in adding a new market player to bring in more competition.  This parastatal bank was just brought in to break the monopoly, which longer-established banks were enjoying.  Other than that, there is no government ownership anywhere else in the banking sector. The Central Bank in Mauritius stays independent in the performance of its functions.  We have the power to grant licences and we welcome new players from other countries.   In fact, we are constantly receiving new applications - and approving, if it’s a good bank. We have banks from India, South Africa, and France, to mention but a few.  What we focus on is what they do once they set up shop up in the country, how they perform and adhere to our regulations and how they assume their responsibilities.   We have a quite competitive banking sector, but we need more players and products. So, we are bringing in new players.  


Singapore and Dubai have always been seen as benchmark economies and Mauritius wants to place itself on the same level in Africa.  What is your vision for Mauritius in this aspect within the next 5 years?

We will be doing more of the same. This is not a race to beat Dubai or anyone else.  It is about doing what needs to be done because the financial sector is being developed and depth is being added to it. It is growing with the players that are present in the country. We have noticed an interesting trend – when our enterprises expand overseas, our banks accompany them.  This is how they have been extending their footprints in the region.   At the same time there are other players in Africa who come to structure or headquarter their operations in Mauritius.  Our banks respond to their needs, as well, by extending their product offerings.  There is currently a demand for pure private banks, although the existing banks offer private banking products.  We have thus granted recently licences to two pure private banks. 

The pace at which the sector is growing has accelerated.  This is because the sector is becoming more dynamic, and there is pressure from regulators to take steps to prevent the problems that generated the last crisis.  This is why, by the end of 2014, we aim to be Basel III-compliant. People recognize us as good in doing business, next to global leaders in terms of regulations, with no doubt about our positive performance.



You were designated “Central Banker of the Year 2012, Africa”, and later that year you were conferred the distinction of G.O.S.K by the President of the Republic of Mauritius. What do these acknowledgements represent for you on a more personal level?

It is good to know that what you are doing is recognized.  It is certainly not our motivation, for the simple reason that we never thought that a small country like Mauritius could have its governor aspiring to become Banker of the Year in Africa. This was never on our radar.  We just addressed the problems we were facing in the way we knew.  If it’s recognized, it is an encouragement, knowing that we are doing the right things.


To conclude this interview Governor, our readers are more interested on the leaders we interview than on the company or institution. In that context, what message would you like to send to our worldwide readers of HARVARD BUSINESS REVIEW?

Attention must not be focused only in the large countries that are usually making the headlines. When Africa is mentioned, most people won’t think about Mauritius, they might not even know who we are.  It is very easy to get lost, among large countries with oil, or the ones with high corruption rates. Therefore, it is important to remember that Africa is a big continent full of countries of all sizes.  We are among the smallest and we are ready to rank among the best ones.  Looking at the records, for 50 years now, our progress has been on an upward trajectory.  There are not many countries in the world which can say that, especially one that has neither mineral resources nor a big population. It proves that we have survived by re-engineering ourselves, changing our policy approach, and benchmarking with best practices.

My final message is to go beyond the headlines, beyond the big countries and you will find some untold good success stories in Africa. Mauritius is one of those, the silent hero of the African transformation.