BoM introduced certain measures to assist households and businesses in Mauritius amid COVID-19 pandemic. These measures include reduction in cash reserve ratio, easing of banking guidelines, moratorium on loans, special relief amount, issuance of savings bonds, special foreign currency (USD) line of credit, and swap arrangement to support import-oriented businesses. BoM also issued clarifications regarding the loan moratorium for some categories, including economic operators, small and medium enterprises (SMEs), households, and individuals. The moratorium announced by BoM involves deferments of the repayment of capital and interest, where applicable, on loans for a specified period of time. BoM also outlined a series of measures to ensure continuity in the provision of basic banking services by commercial banks.
The following are the key highlights of the announced measures:
- Reduction of Cash Reserve Ratio—BoM is reducing with immediate effect, until further notice, the Cash Reserve Ratio applicable to commercial banks from 9% to 8%. The amount released through this cut will be held in a special account at the BoM and will allow commercial banks to use these particular balances for any facility to be granted to any impacted economic operator.
- Easing of Banking Guidelines—BoM has put on hold the guideline on credit impairment measurement and income recognition, which had been effective since January 2020. This decision has been taken to allow commercial banks to continue supporting enterprises facing cash flow and working capital difficulties in the context of COVID-19 outbreak.
- Moratorium on Loans—Commercial banks are providing a moratorium of six months on capital repayment for existing loans for economic operators, starting from March 23, 2020, that are being affected by the pandemic. Commercial banks are also providing a moratorium of six months on capital and interest repayment for existing loans for SMEs starting from March 23, 2020.
- Support to Households—Mauritian households impacted by COVID-19 may request their commercial banks for a moratorium of six months on capital repayments on their existing household loans as from April 01, 2020. In addition, for households earning a combined monthly basic salary of up to MUR 50,000, BoM will bear the interest payable for the period April 01, 2020 to June 30, 2020 on their outstanding household loans with commercial banks.
- Special Relief Amount of MUR 5 Billion—BoM is introducing a special relief amount of MUR 5 billion through commercial banks to meet cash flow and working capital requirements of economic operators, which are being directly impacted by the pandemic. The special relief amount is being made available from the March 23, 2020 to July 31, 2020, to all sectors of activities impacted by COVID-19, including SMEs. On April 17, 2020, BoM reduced the interest rate applicable on its Special Relief Amount by 100 basis points. The interest rate on advances to impacted economic operators under the Special Relief Amount, initially capped by BoM at the fixed rate of 2.50% per annum, now stands at 1.50% per annum. There will be a moratorium of six months on capital and interest repayments, with the loan repayment period being two years.
- Issue of a 2020 Savings Bond—BoM is introducing a 2.5% Two-Year 2020 Savings Bond for an amount of MUR 5 billion from March 23, 2020. The bond will be issued at par in multiples of MUR 25,000 to individuals who are Residents of Mauritius and up to a maximum cumulative investment amount of MUR 1 million per investor and to locally registered Non-Governmental Organizations running on a non-profit making basis for the same maximum investment amount of MUR 1 million. This measure aims at further assisting depositors to diversify their savings portfolio.
- Special Foreign Currency (USD) Line of Credit—BoM introduced a special foreign currency (USD) line of credit targeting operators having foreign currency earnings, including SMEs. This line of credit shall be for an amount of USD 300 million, to be made available through commercial banks. Funds will be made available to commercial banks at six-month USD Libor for this facility. This line of credit has been available from March 24, 2020 until June 30, 2020 and repayment will be over a period of two years from the effective date of disbursement.
- Swap Arrangement To Support Import-Oriented Businesses—A USD/MUR swap arrangement with commercial banks has also been introduced for an initial amount of USD 100 million. This arrangement will enable commercial banks to support import-oriented businesses, except for the State Trading Corporation which will be dealing directly with BoM for its foreign currency requirements until further notice. The swap arrangement has been effective as from March 24, 2020 until June 30, 2020.
- Press Release on Support Measures for Businesses
- Press Release on Support Measures for Households and Businesses
- Press Release on Reduced Interest Rate on Special Relief Amount
- Press Release on Clarifications on Loan Moratoriums
- Press Release on Continuity in Banking Services
Keywords: Middle East and Africa, Mauritius, Banking, COVID-19, SME, Liquidity Risk, Credit Risk, Loan Moratorium, Operational Continuity, BoM
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous ArticleHKMA Announces Enhancements to 100% Loan Guarantee Product for SMEs
EBA published an erratum for the technical package on phase 2 of the reporting framework 3.0.
MAS amended Notice 643A that addresses requirements for banks to prepare statements of exposures and credit facilities to related concerns or parties.
ECB has published, in the Official Journal of the European Union, the Guideline 2021/565 on the euro short-term rate (€STR) and this guideline amends the previous ECB Guideline 2019/1265.
EBA launched a consultation on the draft regulatory technical standards on the list of countries with an advanced economy for calculating the equity risk under the alternative standardized approach (FRTB-SA).
PRA is proposing, via CP7/21, the approach to implementing new requirements related to the specification of the nature, severity, and duration of an economic downturn in the internal ratings-based (IRB) approach to credit risk.
The UK government launched the Recovery Loan Scheme (RLS) as part of its continued COVID-19 support for UK businesses, as announced by HM Treasury on March 03, 2021.
FSB published a letter, from its Chair Randal K. Quarles, to the G20 Finance Ministers and Central Bank Governors, ahead of their virtual meeting on April 07, 2021.
OSFI issued a letter to the deposit-taking institutions issuing covered bonds and announced the unwinding of the temporary increase to the covered bond limit for deposit-taking institutions, effective immediately.
To support recovery from the COVID-19 crisis, EU has published two regulations to amend the securitization framework, as set out in the Securitization Regulation (2017/2402) and the Capital Requirements Regulation or CRR (575/2013).
HM Treasury announced that G7 Finance Ministers and Central Bank Governors met ahead of COP 26, the 2021 UN Climate Change Conference, and agreed on green agenda.