Year 2000 Preparations in the Banking Sector of Mauritius

The critical role of basic infrastructure, including IT based systems, for carrying out financial transactions need not be over-emphasised. Recognising the threat posed by the Year 2000 Problem, chiefly in view of sectoral and international interdependencies, the Bank of Mauritius launched as from May 1997 an awareness campaign regarding this problem. The technical and business issues involved were highlighted, calling for an early remediation of the latent problem in banks’ systems with a view to guaranteeing operational continuity and maintaining a high level of confidence in the banking system of Mauritius.

The awareness campaign proved to be a success. As from July 1998, the Bank started monitoring implementation programmes of banks on a monthly basis at the level of individual institutions. A standard questionnaire, related to identification, planning, implementation, testing and certification by suppliers of Year 2000 issues, was used for this purpose.

Monthly progress monitoring of individual banks was linked initially to a target date of 31 December 1998 for Year 2000 compliance by the entire banking system. The speed of implementation of the Year 2000 project by individual banks varied depending on the size of the banks in some cases and the seriousness with which the management of some other banks addressed the issue. Inevitably, the rather tight deadline of 31 December 1998 was missed and was extended thereafter successively to 31 March 1999 and 30 June 1999 in the light of progress achieved by individual institutions.

By March 1999, 10 out of the 20 banks in operation, representing 39 per cent of the total banking business of the country, reported having shifted over the full range of their operations to their Year 2000 compliant version. By June 1999, the number of banks having completed and changed over to the compliant version increased to 19 and the last bank to report that it had shifted over to its compliant version did so by end-July 1999. Thus, all banks operating in Mauritius have reported that they have completed work on the project, tested and shifted over to their Year 2000 compliant versions.

As part of its supervisory work, the Bank of Mauritius has, in the course of its on-going on-site examination of banks, been overseeing, together with the management of banks, the functioning of banks’ Year 2000 compliant versions.

On the whole, the Bank is satisfied that remediation of the systems has been satisfactorily carried out by individual banks and that the risk posed to the financial infrastructure of Mauritius as regards the banking system has been properly addressed.

The Bank of Mauritius embarked on its own Year 2000 project in May 1997. In the past two years, all its systems, including non-IT items, have been reviewed and remedial action taken, followed by testing. Suppliers of key systems have provided statements to the effect that their products in use in the Bank’s system are Year 2000 compliant. The Bank achieved full compliance by 30 June 1999.

Contingency Planning

While adequate steps have been taken by banks to address the risks of material disruption of their operational infrastructure, there remains a possibility that unanticipated glitches may arise either in the internal systems of banks themselves or due to problems originating outside of banks, which may affect business continuity associated with the millennium date change. Accordingly, parallel actions have been initiated to mitigate such risks and to contain the consequences of any disruption occurring due to such factors so as to ensure business as usual past the millennium date change.

Two banks have completed their contingency plans to cope with such emergencies. The rest of the banking system is due to have completed their contingency plans not later than 30 September 1999. As regards the Bank of Mauritius, its contingency planning is in the process of being finalised whereupon testing will be proceeded with. The deadline for the Bank’s contingency plan is the 30 September 1999.

The Bank of Mauritius has taken other actions in order to increase the banking system’s preparedness for Year 2000 compliance. Thus, steps have been taken to declare 31 December 1999 a bank holiday under section 41 of the Banking Act 1988. The Bank has also made arrangements for an ample supply of banknotes to meet the needs of the millenium change and is working, in this connexion, in close consultation with banks to ensure that any extra supplies of banknotes in response to demand are duly met and liquidity issues are addressed well in time. Adequate measures have accordingly been taken to ensure a smooth transition to the new millenium.