BoM Issued Revised Guideline on Credit Risk Management
The Bank of Mauritius, or BoM, issued revised guideline on credit risk management, which supplements the existing regulations and guidelines. Where this guideline imposes more stringent requirements than those in the existing regulations and guidelines, such requirements shall apply. The guideline supplements guidance provided in the International Accounting Standard (IAS) 39 of the IASB.
The guideline specifies that the role of the board of directors and, through it, the chief executive officer, is to manage the credit activity of a financial institution with integrity. They shall remain accountable and liable for actions taken, or not taken, during the time they were in office, when such actions were called for using normal prudence. The guideline aims to: promote:
Sound credit risk and valuation policies and practices dealing with loans and similar other financial instruments
Sound risk management processes appropriate for the nature of business of the financial institution
Adoption of an active, anticipatory approach to assessing risk and losses in the loan portfolio
Adequate disclosure of provisions for credit losses, both collective and specific
The guideline will become a focal point of reference for all requirements of the BoM for credit risk policy formulation and management. It applies to all deposit-taking financial institutions regulated by the BoM. A financial institution may want to establish a more comprehensive and sophisticated framework than that outlined in the guideline. This is acceptable, provided all essential elements of the guideline are fully taken into account.
Related Link: Guideline on Credit Risk Management (PDF)
Effective Date: August 18, 2017
Keywords: Middle East and Africa, Mauritius, Banking, Credit Risk Management, Guidelines, BoM
Related Articles
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
BIS Bulletin Examines Cognitive Limits of Large Language Models
The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.
ECB is Conducting First Cyber Risk Stress Test for Banks
As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.
EBA Continues Momentum Toward Strengthening Prudential Rules for Banks
A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.
EU and UK Agencies Issue Updates on Final Basel III Rules
The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards