BNR sets up committee to monitor financial sector

The central bank has set up a committee to monitor the stability of the financial sector with a strong focus on the pension and insurance sectorsThe Financial Stability Committee (FSC) was created to promote stability of the country’s financial system by carrying out periodic assessment of the pensions and insurance sector to mitigate risks.A team of 11 people will conduct macro-prudential assessment and stress testing in the banking sector, identify, monitor and publish associated risks.The committee will look into the institution’s governance, rules and regulations in place, international standards for the entire sector and the prevailing gaps.According to Amb. Claver Gatete, Governor, National Bank of Rwanda (BNR), the insurance and pensions sector was initially not regulated, a practice that ended in 2008 when BNR introduced rules and regulations to manage the industry.“We are focusing on the institutions that were previously not regulated which are the insurance and the pension,” Amb.Gatete said last week at the launch of the committee.They will regulate how contributions from both pensions and insurance sector are collected and invested not to cause risks.In their first meeting last week, FSC acknowledged that there is a need for continued reforms in pension, insurance, banking and microfinance institutions in order to cater for new market developments.“That’s why we see the risks across the board within the financial sector. Its how the money is collected, how much is saved, how much is invested how it’s being done that causes problems,” he said.By setting up a committee, Rwanda joins many other countries especially after the worst world’s financial crisis when banks introduced tough new regulations and stronger internal risk controls.The sector is still challenged by lack of skilled personnel which requires continued capacity building, training staff in governance and management.Assets in the insurance sector have gone up by 24 per cent while capital and reserves rose to 29 per cent in the first three months of 2012.In a bid to maintain the prevailing stability in the financial sector, the central bank is eyeing financial literacy campaign to positively impact on financial inclusions.

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BNR sets up committee to monitor financial sector