Botswana: Financial Sector Assessment Program-Detailed Assessment of Observance—Basel Core Principles for Effective Banking Supervision

IMF Staff Country Reports, March 5, 2024

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Legislative changes for safeguarding operational independence are needed.
The supervisory methodology and bank-rating framework requires a review to be a forward-looking assessment of risk.
The supervision approach can be strengthened with greater use of qualitative information as inputs for offsite analysis together with a shorter onsite examination cycle.
The capital adequacy framework for banks is largely aligned with the Basel framework and proportionate to the risks and complexities of the local banking industry, with minimum capital requirements being set significantly higher than under the Basel framework.
The supervisory approach to management of problem assets, provisions and reserves by banks needs revision.
There is a need to develop guidance for supervisors and supervisory methodologies to encourage higher standards of liquidity risk management.
Material deficiencies exist in relation to regulations for corporate governance.