BoM Publishes Guideline for Write-Off of Non-Performing Assets
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.
Related Links
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
Related Articles
EU Amends CRD4 and CRD5 as Part of Capital Markets Recovery Package
EU published Directive 2021/338, which amends the Markets in Financial Instruments Directive (MiFID) II and the Capital Requirements Directives (CRD 4 and 5) to facilitate recovery from the COVID-19 crisis.
EU Committee Recommends Systemic Risk Buffer of 4.5% in Norway
The Standing Committee of the European Free Trade Association (EFTA) recommended that a systemic risk buffer level of 4.5% for domestic exposures can be considered appropriate for addressing the identified systemic risks to the stability of the financial system in Norway.
PRA Clarifies Approach to Onshoring of Credit Risk Rules for UK Banks
In a recent statement, PRA clarified its approach to the application of certain EU regulatory technical standards and EBA guidelines on standardized and internal ratings-based approaches to credit risk, following the end of the Brexit transition.
FSB Sets Out Work Priorities for 2021
In a recently published letter addressed to the G20 finance ministers and central bank governors, the FSB Chair Randal K. Quarles has set out the key FSB priorities for 2021.
EU Publishes Corrigendum to Revised Capital Requirements Regulation
EU published, in the Official Journal of the European Union, a corrigendum to the revised Capital Requirements Regulation (CRR2 or Regulation 2019/876).
ESAs Issue Statement on Application of Sustainability Disclosures Rule
ESAs published a joint supervisory statement on the effective and consistent application and on national supervision of the regulation on sustainability-related disclosures in the financial services sector (SFDR).
EC Consults on Crisis Management and Deposit Insurance Frameworks
EC published a public consultation on the review of crisis management and deposit insurance frameworks in EU.
HKMA Enhances Loan Guarantee Scheme to Alleviate Pressure on SMEs
HKMA announced that enhancements will be made to the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) and the application period will be extended to December 31, 2021.
EBA Proposes Standards for Supervisory Cooperation Under IFD
EBA launched consultations on the regulatory and implementing technical standards on cooperation and information exchange between competent authorities involved in prudential supervision of investment firms.
BoE Addresses Banks in Scope of First Resolvability Assessment
BoE issued a letter to the CEOs of eight major UK banks that are in scope of the first Resolvability Assessment Framework (RAF) reporting and disclosure cycle.