BoM Publishes Guideline for Write-Off of Non-Performing Assets

By Regulatory News

November 14, 2018

BoM published guideline for the write-off of non-performing assets for all banks licensed under the Banking Act 2004. The guideline aims to provide a broad framework for the write-off of non-performing assets on the books of banks if the prospects of recovery are weak. It also introduces an element of prudence by requiring banks to write-off non-performing assets in a timely manner. The guideline shall come into effect immediately. However, banks are being given a transition period of one year to fully implement all the requirements of the guideline. The guideline will be applicable to non-bank deposit taking institutions, with effect from July 01, 2019.

The guideline requires all banks to have a board-approved policy with respect to write-off of non-performing assets. It further enunciates the broad write-off principles while emphasizing that a write-off by a bank does not signify the forfeiture of its legal right to claim its dues. The guideline requires that the write-off policy should set forth suitable time periods for the write-off of different categories of non-performing assets, based on the individual recovery experience of a bank. However, the maximum time for the full write-off of exposures toward corporate and retail (including mortgages) should not exceed 7 years and 5 years, respectively.

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Effective Date: November 14, 2018; July 01, 2019 (non-banking deposit taking institutions)

Keywords: Middle East and Africa, Mauritius, Banking, Write Offs, Credit Risk, NPLs, NPA, BoM

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