Corporate Governance Chapter 5 in resolving commercial disputes by following the step-by-step evolution of commercial sale disputes before local courts. The survey collects the data by studying the codes of civil procedures and other court regulations, as well as through surveys completed by local litigation lawyers. 682. Enforcing contracts is another area in the Doing Business Survey where Mauritius performs poorly, alongside dealing with licences, registering property and getting credit (see table 5.4). Chapter 5 685. The responsibilities of the two regulators overlap in the case of some institutions, like deposit-taking entities that are engaged in leasing. A few financial conglomerates also operate in the areas of jurisdiction of both the regulators. It is therefore very necessary to coordinate the two regulators in order to complement the supervision of individual licensed entities. This would contribute to a more accurate assessment of the risks to which financial institutions are exposed. 686. To address this need, a Protocol D’Accord (PoA), signed in July 2007 by the two regulators, established a formal mechanism for collaboration between the bank and the FSC. It provided, inter alia, for the establishment of a joint BoM/FSC Commission Coordinating Committee. The PoA also envisages that the parties will agree on the extent of their responsibilities and will harmonise their procedures with regard to the financial institutions that both institutions regulate. It is therefore a framework for cooperation between the BoM and the FSC, as they try to maintain a safe, efficient and stable financial system in Mauritius. Table 5.4: Enforcing contracts in Mauritius Doing business 2007 Doing business 2008 Doing business 2009 Rank Procedures (number) Duration (days) 73 76 37 37 37 750 750 750 Source: World Bank. Doing Business Survey 2009. 683. Mauritius simplified transferring property by abolishing two procedures. It is no longer necessary to get a clearance certificate from the Wastewater Management Authority (WMA) or a tax clearance certificate for municipal taxes. Starting up is also easier. Names for new companies are now verified online. Getting credit may also be easier: after eliminating the minimum threshold for loan amounts, the Public Credit Registry of the Bank of Mauritius (BoM) now captures information on all credit extended by the financial system. The banking sector 687. The banking sector is very important in the Mauritian economy. As was mentioned earlier, there are 18 banks in the country. The two largest are the MCB and the SBM. These two control 70 per cent of the market, while HSBC and Barclays control 22 per cent. 688. The banking system is well capitalised and highly profitable. It has a capital adequacy ratio of 13.1 per cent, which exceeds the regulatory minimum of 10 per cent. The return on assets of this sector has consistently been above 2 per cent for the last five years. Its return on equity is 20 per cent. 689. Credit and operational risks are the most important ones facing the banking system. A substantial fraud of about USD30 million was detected in February 2003. The fraud went undetected for several years. It exposed weaknesses in the sector’s internal audit and governance systems and its inadequate controls. 690. According to the BoM’s Financial Stability Report of February 2009, the banking sector has so far weathered the financial crisis successfully. All the banks operating in Mauritius have shown considerable resilience in terms of capital adequacy, balance sheet growth, profitability and loan delinquencies. The system has not The BoM and the FSC Joint Coordination Committee 684. 250 The CSAR does not address the governance dimensions of the BoM, the banking sector and other financial institutions very thoroughly. As financial institutions increasingly operate globally and diversify their business, it becomes important for supervisory bodies to oversee the safety and soundness of these institutions to ensure financial stability. The BoM has the leading supervisory responsibility for the banking and nonbanking deposit-taking sectors, with the exception of money changers and foreign exchange dealers. However, the FSC has the supervisory responsibility for the other segments of financial services. Corporate Governance 251