Upon leaving the franc zone in June 1973, the government established the Central Bank of the Malagasy Republic (Banque Centrale de la République Magache). Also organized at that time were the Malagasy National Development Bank, an agricultural credit institution, and the National Investment Co., an industrial investment bank. In June 1975, the Ratsiraka government nationalized all private financial institutions. In December 1976, Bankin'ny Tantsaha Mpamokatra (BTM) was established as the national rural development bank, Bankin'ny Indostria (BNI) as the national industrial development bank, and Banky Fampandrosoana ny Varotra (BFV) as the national bank for commerce. There was also a savings bank and a postal checking account system.
Economic reforms in 1988 allowed private foreign investment in the banking sector for the first time since the banks were nationalized. In 1989, the Banque Nationale de Paris was the first French bank to open a private bank, the BMOI, since 1975. Financial sector liberalization has been a key condition of adjustment support.
In 2001, there were six commercial banks in Madagascar, including Banque Malgache de l'Océan Indien (BMOI) and BNI-Credit Lyonnais (BNI-CL), both controlled by European banking institutions; Union Commercial Bank (UCB) and State Bank of Mauritius (SBM), both controlled by Mauritian companies; BTM, controlled by the Bank of Africa; and the Bank of New York (BFV/SG). Total assets of the biggest bank, BNI-CL, were approximately $200 million in 1999. The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $794.4 million. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $1.0 billion. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 11%. There are no securities exchanges in Madagascar.