August 18, 2017

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

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