Fiji has seen continuing growth in its financial system, which has played an increasingly vital role in the economy by mobilising financial savings and channelling these into productive investments. As of 2012 its financial system remained resilient, despite the global financial crisis, in large part thanks to the strong contribution of the banking industry. The industry is very important for the local economy – the commercial bank’s assets were around 42% of the entire financial system at the end of 2010 and the value of total assets was AUS$4.5b (US$4.7b), around 75% of GDP. Additionally, the banks are major employers on the islands. There are five commercial banks in Fiji: ANZ (Australia), Westpac (Australia), Bank of Baroda (India), BSP (Papua New Guinea), and Asset Management Bank (Fiji). ANZ and Westpac have the most extensive operations in the country sharing together some 80% market share. BSP which acquired established Fijian bank Colonial National in 2009 is also considered a major bank in the country. Alongside these banks are three licensed credit institutions, Home Finance, Credit Corporation and Merchant Finance, all of which are Fiji owned. With these banks there are around 30 credit unions which have over 10,000 members. The rest of the financial sector comprises of non-bank financial institutions – the Fiji National Provident Fund, the Fiji Development Bank, Housing Authority, Unit Trust of Fiji, National MBf Finance (Fiji) Limited and insurance companies.
Regulation of Financial Services
The Reserve Bank of Fiji is the overall regulator for the Fijian banking system, which has adopted internationally recognised standards for banking such as the Basel Committee on Banking Supervision. Its legal supervisory role additionally covers those corporate entities which accept deposits from the public. The affairs of the Reserve Bank are supervised by a board of directors appointed by the Minister of finance. In 2009 the Reserve Bank issued a Local Advisory Bank (LAB) policy, with banks which are foreign branches required to establish LABs and provide advice and guidance to the Head of the Fiji Operations on Fiji’s regulatory and supervisory environment.
Development of Financial Services
In the World Bank’s Ease of Doing Business Report Fiji ranked 67th in the world (out of 183 countries) for getting credit and 46th for protecting investors. Both of these ratings compare favourably with other Pacific islands, the only higher rating South Pacific island country being Samoa in the protecting investors category. Although Fiji’s banking sector is well developed in comparison to other South Pacific island countries, many of the services offered are solely targeted at the business sector, government and the urban population; thus a large amount of the population is not served by the banking industry. In response to this the Fijian government and the Reserve Bank have increasingly emphasised the importance of financial inclusion for economic growth and development. In 2009 a National Financial Inclusion Taskforce was set up to monitor and drive strategies to achieve financial inclusion goals. Between then and 2011 the Reserve Bank implemented a range of new initiatives in conjunction with relevant stakeholders.