Regulatory Alerts2016-01-01
Financial Institutions (Prompt Corrective Action) Regulations 2016
Issued by Lesotho’s Central Bank Governor in May 2016, these regulations establish a capital-based framework for the early intervention and supervision of licensed banks. The Commissioner categorizes institutions into five capital tiers using risk-based and leverage ratios, triggering mandatory restrictions on dividends, asset growth, management fees, and affiliate transactions as capital declines. Banks must submit and implement capital restoration plans within thirty days, while critically undercapitalized institutions face potential management replacement or the appointment of a receiver after 270 days.
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