In the late 1980’s and early 1990’s, the Mauritian financial sector was marked by the process of financial liberalisation. Liberalisation and market deregulation was important in order to develop and modernise the financial services sector and at the same time attempting to position Mauritius as a regional financial centre. Market reforms were necessary for the development of the financial services sector which now comprises an array of institutions including well-established banks, insurance and pension companies, stockbrokers, investment companies, non-bank deposit-taking institutions, leasing companies, credit institutions, money changers and foreign exchange dealers.

The Mauritian banking industry comprises of 19 banks, of which 6 are local banks, 8 are foreign owned subsidiaries, 1 is a joint venture and 4 are branches of foreign banks. All the banks are licensed by the Bank of Mauritius to carry out banking business locally and internationally. Some of the biggest and most reputable international banks are present in Mauritius and actively carry out international cross border activities.

Banks render several services in the country. Besides traditional banking facilities, they offer card-based payment services such as credit and debit cards provide internet banking and phone banking facilities. Specialised services such as fund administration, custodial services, trusteeship, structured lending, structured trade finance, international portfolio management, investment banking, private client activities, treasury and specialised finance are also offered by banks. The international banks offer a wide range of global banking and financial services to corporate, institutional and private clients.

Prior to December 2004, banks were required to obtain a separate license and there were restrictions on using the domestic currency and operating in the domestic banking environment. The separate licensing requirements for banks engaged in “domestic” and “offshore” banking activities were removed by the new Banking Act, which came into effect in November 2004.

There is a good and strong regulatory framework for banks in Mauritius. Besides the Bank of Mauritius Act (2004) and the Banking Act (2004), the Bank of Mauritius (BOM) has issued several Guidelines governing the day to day operations of banks. Since 31st March 2008, the Basel II Framework has been operational with the BOM issuing several Guidelines for the implementation of the Basel II principles.

As at June 2010, there were 386 ATMs in operations with a total of 3,871,374 transactions for an amount of Rs 7,082 million. As at that date, there were 202,219 credit cards and 991,290 debit and other such cards in circulation.

As at Q3 2010, banks operated with a capital adequacy ratio of 16.0 per cent, well above the minimum prescribed level of 10 per cent. Tier 1 capital, which is the core measure of a bank's financial strength, constituted 85.6 per cent of the consolidated capital base of banks with Tier 1 capital adequacy ratio standing at 13.7 per cent. The level of non-performing loans (NPL), which is a key indicator of the soundness of banks has improved, falling from 2.4 per cent to 2.1 per cent of total loans. Over the same year, there has also been a reduction of 33.0 per cent in the level of NPL in respect of advances granted outside Mauritius.