(APPROVED TRANSLATION)
This Act is to make provision
for the establishment of Maldives Monetary Authority and to provide for
matters incidental thereto and connected thereto. It is hereby enacted
as follows:
Chapter I -
Preliminary
1. This Act is called
'Maldives Monetary Authority Act 1981'. The President of the Republic
may appoint different dates in relation to the coming into effect of
the different provisions of this Act.
2. In this Act unless
the context otherwise requires:
- 'Asset' means: anything
of value that is owned;
- 'Authority' means:
Maldives Monetary Authority established under Article 3;
- 'Bank' means: a
financial institution whose business includes the acceptance of deposits
of money transferable by cheque;
- 'Banking business'
means: ( 1) the business of receiving funds from the public or from
a member or members thereof through the acceptance of money deposits
payable upon demand or after a fixed period or after notice, or any
operation through the frequent sale or replacement of bonds, certificates,
notes or other securities, and the use of such funds either in whole
or in part for loans or investments for the account and at the risk
of the person doing such business and, (2) any other activity recognized
by the Authority as customary banking practice which a financial institution
engaging in the activities described in (1) may additionally be authorised
to do;
- ' Bill of Exchange
' means: an unconditional order in writing addressed by one person
to another, requiring the person to whom it is addressed to pay on
demand or at a fixed date or determinable future time, a sum certain
in money to or to the order of a specified person or to the bearer;
- ' Board' means:
the Board of Directors of the Authority;
- ' Bullions' means
: gold and silver in bars or in the mass; and also large quantities
of gold, silver and other metal coins especially when regarded by
weight;
- 'Cheque' means:
an unconditional order in writing drawn on a banker signed by the
drawer, requiring the banker to pay on demand a sum certain in money
to, or to the order of a specified person or to the bearer;
- 'Clearing house'
means: an association of banks located in the same city agreeing to
join together to facilitate the daily exchange of cheques, drafts
and notes among themselves;
-'Department of Finance'
means: the Department of Finance of the Government of Maldives;
-'Discount' means:
an amount deducted from the principal amount of a sale transaction;
or to deduct from the principal amount.
- 'External Reserve'
means: holdings of certain assets usually gold, Special Drawing Rights
and Foreign Claims;
-'External Transaction'
means: any dealing involving foreign exchange earned by the country
or remitted abroad from the country;
- 'Financial Institution'
means: any person doing banking business;
- 'Fiscal Agency'
means: a body looking after financial matters in all respects;
- 'General Reserve'
means: the General Reserve established under Article 27;
- 'Government' means:
the Government of Maldives;
-'Legal Tender' means:
currency in circulation prescribed by Act as tender which must be
accepted for payment by the person to whom it is tendered.
- 'Liability' means:
anything which a person is liable to return or give.
- 'Monetary' means:
of or relating to money or to the mechanisms by which it is supplied
to and circulates in the economy;
- 'Notes' and 'Coins'
means: notes and coins issued under the terms of this Act to be used
as currency;
- 'Overdraft' means:
maley drawn from a bank account in excess of the amount deposited;
- 'Promissory Notes'
means: an unconditional promise in writing signed by the maker, to
pay at a fixed date or a determinable time a sum certain in money
to, or to the order of a specified person or to the bearer;
- 'Rediscount' means:
resale of a promissory note or bill of exchange by the one who has
bought it;
- 'Reserve' means:
cash maintained in a bank's own vault, or, claims in cash on deposit
with compulsory or optional depositories;
- 'Security' means:
(1) a written instrument which is issued in bearer or registered form
and is of a type commonly dealt in upon securities exchanges or markets
or commonly recognized in any area in which it is issued or dealt
in as a medium for investment;
(2) a written instrument
evidencing mortgage of property or a pledge in respect of a loan;
- 'Treasury Bill' means:
non-interest bearing obligations of a government, sold at less than
face value.
Chapter II
- Constitution
3. There is hereby established
an Authority to be known as the Maldives Monetary Authority, which shall
be a body corporate under that name with perpetual succession. It may,
in such name, sue or be sued, and may enter into contracts, and, subject
to the provisions of this Act, may acquire, purchase, take, hold and
use real and personal property of every description and may convey,
assign, surrender and yield up, charge, mortgage, transfer or otherwise
dispose of, or deal with or in, real or personal property .
4. The principal purposes
of the Authority shall be:
(a) to issue currency
and regulate the availability, and international value of the Maldivian
Rufiyaa;
(b) to provide advisory
services to the Government on banking and monetary matters;
(c) to supervise and
regulate banking so as to promote a sound financial structure; and
(d) to promote in
the country and outside the country the stability of Maldivian currency
and foster financial conditions conducive to the orderly and balanced
economic development of Maldives.
5. The Authority shall
have its head office in Male ' and may establish such branch offices
within Maldives as it sees fit.
6 . ( 1) There shall
be a Board of Directors of the Authority that shall be responsible for
a policy and affairs of the Authority.
(2) The Board shall
consist of:
(a) The Minister in
charge of Finance as ex officio Governor of the Authority;
(b) Senior-most official
of the Department of Finance as ex officio Vice Governor of the Authority;
(c) Three members
appointed by the President of the Republic from amongst heads of Government
Offices responsible for economic subjects; and
(d) Two members from
the private sector appointed by the President of the Republic.
(3) The two members
appointed under Section 2 (d) of this Article shall be persons of recognized
standing and experience in administration, finance and business . Such
a member shall not, at the time of his appointment or during his tenure
as a member of the Board, be a public officer, or hold any post or a
substantial number of shares in any financial institution under this
Act and the regulatory jurisdiction of the Authority.
(4) Four members shall
constitute a quorum.
(5) Each member serving
on the Board by virtue of Section (2) (c) of this Article shall nominate
the senior-most official of his office or offices to participate as
his Alternate on the Board if he cannot attend due to being absent from
Male ' or for any other reason or being in-charge of more than one office.
(6) The Governor shall
preside at meetings of the Board. In his absence any member nominated
by him shall preside at the meeting.
7. (1) Subject to the
provisions of this Act, the Authority shall make and implement regulations
for its own procedures, and in particular, make regulations or rules
regarding meetings and the holding of meetings , the keeping and custody
of minutes, and the opening, keeping, closing and audit of accounts.
(2) The expenses and
remuneration to be received by the two members appointed under Article
6, Section 2 (d) shall be determined by the Board with the approval
of the President of the Republic. The other members of the Board shall
receive no remuneration.
8. The President of
the Republic may, on the recommendation of the Board engage officers
or terminate their services, fix the amount and manner of paying their
remuneration and prescribe the terms and conditions f or their employment,
as it may consider necessary for due performance of the functions of
the Authority. The ex-officio Vice Governor shall serve as the executive
head of the Authority.
9. The Board shall meet
as often as the Governor may consider the business of the Authority
may require but not less frequently than four times a year .
10. (1) No member of
the Board shall act as a delegate of any commercial, financial, agricultural,
industrial, or other interest or receive or accept directions there
from in respect of duties to be performed under this Act.
(2) All members of the
Board shall fully disclose to the Board any commercial, financial, agricultural,
industrial or other interest that they may have directly or indirectly
in any matter which becomes the subject of Board decision.
(3 ) No member of the
Board nor any officer of the Authority shall accept any gift f or himself
or for his spouse or his spouse's parents or children or brothers or
sisters or for persons with whom he may have business or financial connections
which would result in him being partial in the performance of his duties
under the Act.
(4) Any person who contravenes
the provisions of this Article shall be guilty of an offense and enable
to a fine not exceeding 10,000 rufiyaa or to imprisonment or banishment
or house arrest for a period not exceeding one year or to both such
fine and such imprisonment or banishment or house arrest.
11. (1) No member of
the Board, nor any Officer of the Authority, shall disclose to any person
any material information relating to the affairs of the Authority or
of any bank or other financial institution or other person which he
has acquired in the performance of his duties under this Act except
f or the purpose of the performance of his duties or when lawfully required
to do so by a court.
(2) Any person who contravenes
the provisions of this Article shall be guilty of all offence and liable
to imprisonment or banishment or house arrest for a period not exceeding
two years, or a fine not exceeding 20,000 rufiyaa, or to both such fine
and such imprisonment or banishment or house arrest.
Chapter III
- Maldivian Currency
12. The unit of currency
of Maldives shall be the rufiyaa, which shall be divided into one hundred
laari.
13. The President of
the Republic in consultation with the Board may decide an external value
for the rufiyaa having due regard to the obligations that Maldives has
assumed in accordance with the provisions of any international monetary
agreement to which it is a party. Notices of any change in the external
value of the rufiyaa shall be published by the Authority on the instructions
of the President of the Republic.
14. (1) The Authority
shall have the sole right to issue legal tender notes and coins in Maldives,
and no other person shall issue notes or coins or any documents or tokens
which are likely to pass as legal tender .
(2) The Authority shall:
(a) arrange for the printing
of notes and the minting of coins and for all matters relating thereto
and f or the security of such notes and coins;
(b) issue, withdraw,
reissue, and at its discretion, exchange notes and coins, including
notes and coins issued by the Government before the coming into force
of this Act .
15. (1) Notes issued
under this Act shall be of such form and design and printed from such
plates and on such paper as the Board authorises. Denominations shall
be such as may, from time to time, be specified by the Authority .
(2) Coins issued under
this Act shall be of such denominations and of such weight, form and
design and made of such metal or metals as may, from time to time, be
specified by the Authority.
(3) Notes and coins
issued by the Government which were legal tender and not cancelled before
the coming into force of Article 14 shall in all respects be legal tender
.
16. (1) Subject to the
provisions of Section (2) of this Article a tender of payment of money
if made in the following manner shall be legal tender
(a) in the case of notes,
for the payment of any amount;
(b) in the case of
one laari coins, for the payment of an amount not exceeding one rufiyaa;
and
( c) in the case of
coins of denominations higher than one laari, for the payment of an
amount not exceeding fifty times the face value.
(2) A note or coin that
has been illegally dealt with shall not be legal tender .
( 3 ) For the purpose
of this Act:
(a) a note shall be deemed
to have been illegally dealt with if otherwise than by fair wear or
tear its number, denomination, or signature has been damaged or its
original characteristics written or drawn have been willfully altered;
(b) a coin shall be
deemed to have been illegally dealt with if, otherwise than by fair
wear or tear it has been damaged or lightened or has been willfully
defaced by having any word, number or anything written or drawn stamped
or engraved thereon, whether it has or has not been thereby diminished
or lightened.
17. ( 1) In any proceedings
in which the genuineness of any notes or coin purporting to have been
issued by the Authority shall be in question a certificate under the
hand of a duly authorised officer of the Authority to the effect that
such currency note or coin is authentic or spurious shall be accepted
by all courts of law as evidence of the authenticity of such currency
note or coin.
(2) The officers shall
not be questioned with respect to any such certificate.
18. (1) The President
of the Republic may, by notice issued on the recommendation of the Authority,
declare that any notes or coins shall, with effect from such date as
may be specified in the notice, cease to be legal tender in Maldives.
Provided that after
such notes or coins shall have so ceased to be legal tender, the Authority
shall be obliged to redeem any such notes and coins if presented to
the Authority within such period as may be specified by the President
of the Republic in the said notice.
( 2 ) An amount equivalent
to the face value of any such notes or coins ceasing by Presidential
notice under Section ( 1) above to be legal tender and not presented
to the authority within the time specified by the President shall be
transferred to the Government and deducted from the liabilities of the
Authority .
19. No person shall
be entitled to claim from the Authority the value of any lost, stolen,
mutilated or imperfect note or coin; or of any note or coin which has
been illegally dealt with. However the Authority may, at its discretion,
determine the circumstances and conditions under which the value of
any note or coin which has been illegally dealt with or of any mutilated
or imperfect note or coin may be refunded .
Chapter IV - Functions and Financial
Provisions
20. On the coming into
operation of this Act there shall be transferred from the Government
to the Authority all the functions pertaining to the Authority including
currency note issue functions, banking functions and reserve management
functions together with the appropriate staff and such property, including
unissued currency and such assets and corresponding liabilities as are
necessary for the assumption of these functions upon such transfer,
the liability for currency issued by the Government and remaining outstanding
and the liability of the Government for the deposit accounts shall become
the liabilities of the Authority.
21. ( l) The Authority
shall be the depository of the External Reserves of the Maldivian Government.
(2) The Authority shall
maintain an External Reserve of internationally accepted reserve assets
consisting of all or any of the following on such terms and conditions
as the Board may prescribe:
(a) gold;
(b) foreign exchange
in the form of notes or bank balances held abroad;
(c) any internationally
recognized reserve assets, including
- the reserve position
of Maldives in the General Department of the International Monetary
Fund;
- the holding of any special drawing
rights in the International Monetary Fund by Maldives;
(d) bills of exchange
and promissory notes payable in foreign currency outside Maldives specified
by the Board;
(e) treasury bills
issued by foreign governments bought by the Authority.
(f) securities issued
or guaranteed by foreign governments or international financial institutions
bought by the Authority .
(3) The Authority shall
use its best endeavours to maintain the External Reserve at a level
which is appropriate in relation to the external transactions of Maldives.
22. The Authority may:
a) open accounts for,
and accept deposits from, the Government its agencies and public entities,
banks and other financial institutions in Maldives.
(b) act as correspondent,
banker, agent or depository for any monetary authority, central bank
or international financial institution;
(c) open and maintain
accounts with such banks or other depositories and appoint them as
correspondents or agents of the Authority in or outside Maldives as
may be necessary;
(d) buy, sell or deal
in gold coins, bullion or foreign exchange;
(e) buy, sell, invest,
or deal in treasury bills and other securities issued or guaranteed
by foreign governments or international financial institutions;
(f) buy, sell, invest,
or deal in treasury bills and other securities issued or guaranteed
by the Government;
(g) make loans, advances
and rediscounts to banks and other financial institutions in Maldives
for periods not exceeding 90 days on terms and conditions which the
Board may prescribe;
(h) make temporary
advances to the Government as may be agreed;
(i) make advances
to the Government on terms and conditions to be agreed upon in respect
of subscriptions and other payments relating to the membership of
Maldives in any international financial institution, the participation
of Maldives in any account thereof, and any transactions and operations
undertaken in connection therewith;
(j) act as fiscal
agency of the Government in its dealings with international financial
institutions and undertake other financial agency work for the Government;
(k) borrow money for
the purpose of the business at the Authority, and may give securities
for money so borrowed as provided by Law with the approval of the
President of the Republic and,
(l) in conjunction
with the banks, organise and manage a Clearing House.
23. (1) The Authority
may buy and sell and determine dealing rates for gold and foreign exchange
.
(2) The Authority may
determine and make public the rates at which gold and foreign currencies
may be bought, sold or dealt in by banks and other persons authorised
to do so in Maldives
(3) The Authority may
determine a mid rate around which buying and selling rates may be established.
(4) Sale of special
or commemorative coins for foreign currency shall not be treated as
a foreign currency transaction for the purpose of this Article.
24. The Authority shall
not:
(a) open accounts for,
or accept deposits from, any person except as provided in paragraphs
(a) and (b) of Article 22;
(b) enter into any
transaction authorised in paragraphs (d) and (e) of Article 22 except
with the Maldivian Government, its agencies and public entities, banks
maintaining accounts with the Authority and other financial institutions,
foreign monetary authorities and central banks, foreign Governments
and International Financial Institutions;
(c) purchase or retain
ownership of real estate except insofar as is necessary for the conduct
of its business and for the living quarters of its officers.
Chapter V -
Capital, Profit and Reserves
25. (1) The authorised
capital of the Authority shall be four million rufiyaa and may be increased
from time to time by such amounts as may be proposed by the Board and
approved by the President of the Republic. No reduction of capital shall
be effected except by an amendment of this Act.
(2) Upon the establishment
of the Authority the Government shall pay towards its authorised capital
an amount of one million rufiyaa and such further amounts as may from
time to time, be proposed by the Board and approved by the President
of the Republic.
(3) All capital of the
Authority, as and when issued, shall be for the sole account of the
Government and shall not be transferable nor capable of being claimed
in a court nor subject to mortgage.
26. The net profits
of the Authority for any financial year shall be determined by the Authority
after meeting all current expenditure for that year and after making
provisions for
(a) bad debts as determined
by the Board, doubtful debts and depreciation of assets;
(b) such other purposes
as the Board may deem necessary; and
(c) the redemption
of any securities issued by the Government under Article 27, Section
(3).
Provided that profits
and losses arising under Article 28 shall not be included in the calculation.
27. (1) The Authority
shall establish its General Reserve to which shall be allocated at the
end of each financial year 50 percent of the net profit of the Authority,
until such time as the General Reserve is equal in amount to the authorised
capital of the Authority after which 25 percent of the net profit shall
be allocated to the General Reserve until the General Reserve is equal
to twice the authorised capital.
(2) After allocations
have been made to the General Reserve under Section( 1) the remainder
of the net profit of each year shall be transferred to the Government.
(3) If the Authority
should make a net loss which exceeds the amount of the General Reserve
at the end of that year, a sum equivalent to such excess shall be paid
to the Authority by the Government in non-negotiable, non-benefit bearing
securities.
28. (1) The Authority
shall make a valuation of its assets and liabilities in gold, foreign
currencies or other units of account at least quarterly .
(2) The gains arising
from any change in the valuation of the Authority's assets or liabilities
in gold, foreign currencies or other units of account, as a result of
alterations of the external value of the rufiyaa, or of any change in
the values, parities, or exchange rates in respect of such assets in
relation to the rufiyaa shall be credited to a Revaluation Reserve Account
and neither they nor the losses arising from any such change shall be
included in the computation of the annual profits and losses of the
Authority.
(3) The losses arising
from any such change shall be set off against any credit balance in
the Revaluation Reserve Account. Notwithstanding any other provision
of this Act, if such balance is insufficient to cover such losses, the
Government shall issue to the Authority non-negotiable, non-benefit
bearing securities for the amount, required to adjust such losses .
(4) Any credit balance
in the Revaluation Reserve Account at the end of each financial year
of the Authority shall be applied first to the redemption of any securities
issued under Section (3) of this Article.
After redemption of
securities if the remaining balance is 100,000 rufiyaa or more, one
fifth of the remaining balance shall be paid to the Government.
If the remaining balance
is less than 100 ,000 rufiyaa, it shall be paid in full to the Government.
(5) No credits or debits
shall be made to the Revaluation Reserve Account except in accordance
with the provisions of this Article.
Chapter VI - Relations with Banks
and other Financial Institutions
29. (1) No bank or other
financial institution shall commence or carry on banking business in
Maldives, unless it holds a licence granted by the Authority for that
purpose .
Banks which are in existence
in Maldives on the date of the commencement of this Act shall be granted
a licence forthwith.
(2) The Authority shall
prescribe licensing conditions for the purpose of Section (1) of this
Article.
(3) The Authority shall
have the power to revoke a licence granted under this Article, whenever
a bank or other financial institution fails to comply with the conditions
specified in the licence or with any provisions of this Act, or Regulations
made under Article 36 of this Act.
Provided that the bank
or other financial institution shall be entitled to appeal against the
decision of the Authority to the President of the Republic within 30
days of being informed of the decision, and the decision of the President
of the Republic shall be final and conclusive.
30. (1). The Authority
may, periodically or at its discretion cause an inspection to be made
by any of its officers of any bank or other financial institution, and
its books and accounts for the purpose of ascertaining its manner of
operation.
(2) Any officer authorised
under this Article to inspect a bank or other financial institution
may require.
(a) any director, or
officer of any bank or other financial institution to furnish such information
as the Authority may consider necessary for the purpose of the inspection;
(b) or require any
such director, or officers to produce for inspection any books, records,
or other documents in his possession or custody containing or likely
to contain any such information .
(3) Without prejudice
to the provisions of Article 29 (3), any person who -
(a) fails, refuses or
neglects to comply with any requirement of an officer of the Authority
made under Section (2) of this Article; or
(b) in complying with
any such requirement, furnishes any information or produces any book,
record or other document which he knows to be false,
is guilty of an offence
and liable on conviction to a fine not exceeding 20 ,000 rufiyaa.
3. (1) The Authority
may, by written notice to each bank or other financial institution at
its principal place of business in Maldives, prescribe the maintenance
of required reserves against deposit and other similar liabilities determined
for this purpose .
(2) The reserve prescribed
under Section (1) shall be maintained by way of cash holdings or by
way of deposits with the Authority in such manner as the Authority prescribes.
(3) The Authority may
prescribe different ratios for different classes of deposit and other
similar liabilities and the method of determining these ratios:
Provided that:-
(a) The Authority shall
not require banks or other financial institutions to hold a total amount
of reserves in excess of 40 percent of the total deposit and other similar
liabilities to which reserve ratios have been made applicable:
Provided, however,
that when the monetary situation requires, the Authority may, with
the concurrence of the President of the Republic prescribe higher
ratios;
(b) the initial prescription
of, or any increase in , the reserve ratios shall be effective only
after atleast 15 days ' notice thereof has been given;
(c) the Authority
may determine the reserve ratios on the basis of averages held over
such period as the Authority prescribes;
(d) the reserve ratios
shall be uniform for each class of financial institutions in Maldives.
(4) The Authority may
impose on any bank or other financial institution which fails to maintain
required reserve ratios prescribed under this Article a charge at an
annual rate not in excess of twice the highest effective service charge
determined by the Authority to have been charged any of the customers
of that bank or other financial institution during the period of the
deficiency.
(5) The charge mentioned
in Section (4) may be imposed as from the date on which the deficiency
occurs .
32. (1) The Authority
may, with the written authority of the President of the Republic, prescribe
by written notice to each bank or other financial institution at its
principal place of business in Maldives -
(a) maximum and minimum
amounts of benefits payable in respect of deposit and other similar
liabilities and methods of calculation thereof; and
(b) the permissible
purposes, maximum totals, maximum amounts beyond which the Authority's
approval is necessary, maximum maturities and maximum service charge
and minimum cash deposit or security required, in respect of -,
( i) the making of advances
, whether by loans or overdrafts, and investments;
(ii) the discounting
of bills of exchange, promissory notes and other commercial or financial
paper;
(iii) the issuing
of letter of credit;
(iv) the granting
of acceptances and other forms of credit .
(2 ) With the approval
of the President of the Republic, Section (1) may be made applicable
by the Authority, and by written notice, to any person having as a main
object of his business the extension of credit.
(3) The Authority may
examine the accounts, books and papers of any person who, it has reason
to suspect, is extending or has extended credit in contravention of
Section ( 1) and the refusal to submit such accounts, books and papers
shall be evidence of such contravention.
(4) Notices issued under
this Article shall apply uniformly in Maldives and shall come into effect
on such date specified not earlier than 14 days after the date of issue
and the Authority in its notices may differentiate between financial
institutions and other creditors or classes thereof in respect of the
items set out in Section (1) .
(5) Any bank or other
financial institution which contravenes Section (1) of this Article
is liable to pay to the Authority for each such contravention a charge
not exceeding 2 ,000 rufiyaa f or every day during which the contravention
continues .
(6) Any person to whom
Section (1) is made applicable pursuant to Section (2) shall be guilty
of an offence if -
(a) he contravenes Section
(1) of this Article; or
(b) he supplies to
the Authority any false information or information of which he is
not sure of the truth; or
(c) he fails to furnish
to the Authority within a reasonable time given to him any information
required by the Authority to satisfy the Authority that he is complying
with Section (1) of this Article, and is liable on conviction-
33. A bank or other
financial institution in Maldives shall maintain assets consisting of
claims payable in rufiyaa and other assets- situated in Maldives in
such minimum proportions of its deposit and similar liabilities payable
in rufiyaa as the Authority may prescribe.
34. The Authority may
prescribe the maximum amount of the working balances which banks and
other financial institutions may hold in foreign currencies generally
or in any specified currency or currencies.
Chapter VII
- Miscellaneous Provisions
35. (1) The Authority
shall, as soon as may be after the end of every month, make up a statement
of the condition of the Authority as at the close of business on the
last business day of each month and may publish it.
(2) At the end of each
calendar year the Authority shall prepare and submit to the President
of the Republic a report on its operations during the past year together
with a copy of its annual accounts certified by the auditor and shall
publish this report and annual accounts after obtaining the approval
of the President.
(3) The accounts of
the Authority shall be audited by the Government Auditor of Maldives
or by an auditor approved by him.
36. The Board may, with
the approval of the President of the Republic, make regulations for
the proper execution of the provisions of this Act.
37. Any punishment for
offenses committed under this Law shall this Law only be as specified
in this Act
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