Opening local forex accounts

Residents must study the options offered by the local commercial banks when considering the opening of local accounts in foreign currency.RESIDENTS must look around and study the options offered by the local commercial banks when considering the opening of local accounts in foreign currency.

After months of confusion, when most banks could not offer clients any service, besides those certified as foreign exchange earners, mostly those in the tourism trade, it was announced recently that guidelines have been issued by the Central Bank to the commercial banks.

It was not unusual until recently for banks to turn down foreign currency point blank. It appears they could either not be bothered or were at a loss as to what to do in such situations.

However, it appears that the commercial banks are now interpreting the so called "guidelines" in different ways.

 Barclays Bank besides identification demands proof of residential address, source of funds and that the deposits are constant. Barclays is also reluctant to accept notes, unless the exact source of the funds is disclosed.

NouvoBanq and the Mauritius Commercial Bank (MCB) are easier.  Both banks request no identification if the client already holds a rupee account. The source of the funds is immaterial unless it is a huge amount, when depositors will be expected to explain the source as is the case already with rupee accounts. The minimum deposit is $10,000. But customers may also deposit in other foreign currencies in which case, this can be converted into dollars or maintained as. Furthermore, withdrawals will not be subjected to queries.

The MCB says it can open a local forex account within a week if the depositor is already a customer, in which case, he or she needs to write a letter to the bank's management. Otherwise, proof of identification will be required. A client may start an account with as little as $500 or the same amount if euros or pound sterling.

The government is anxious to attract foreign exchange from local sources after the idea was categorically rejected in the 1990s. At the time, the then Finance Minister James Michel even claimed that local forex accounts would be used to fuel the parallel market.

It appears that Government is targeting persons receiving pensions from overseas sources and also those whose relatives abroad send them regular allocations.

Only persons classified as “foreign exchange earners" were allowed to open accounts locally.

This has since been extended to virtually everybody. Recently, farmers were told at a meeting on food security that they could demand payment in forex when selling to hotels and use that to import their requirements, such as fertiliser, pesticides seeds and equipment.  At the same meeting, it was also said that more private operators should get involved in importing and selling agricultural requirements.

June 20, 2008
Copyright 2007: Seychelles Weekly, Victoria, Mahe, Seychelles