Featured Product

    BoM Revises Guideline on Credit Concentration Risk

    August 22, 2019

    BoM published the guideline on the regulatory credit concentration limits and the basic framework of credit concentration risk management to be put in place by financial institutions. BoM has amended Annex I of the guideline to require the exposure value of on-balance sheet items to be defined as the accounting value of the exposure, net of specific provisions and value adjustments. Alternatively, a financial institution may consider the exposure value gross of specific provisions and value adjustments. Details on the computation of Fund Based and Non-Fund Based exposures have been removed. The changes in the guideline shall be applicable with immediate effect.

    The guideline applies to all banks and non-bank deposit-taking institutions licensed under the Banking Act 2004. The guideline stipulates that a financial institution shall report to BoM on a quarterly basis, in the required form and manner, all information related to its large credit exposures, including exemptions permitted under this guideline. A financial institution shall develop credit policy, which shall comprise the credit concentration risk policy. This should include the principles and objectives governing the extent to which they are willing to accept credit concentration risk. The policy shall set out prudent rules and internal limits for granting credit to a single customer and its related parties, which shall not exceed the stipulated regulatory limits. A financial institution shall at least once a year conduct stress tests of its major credit risk concentrations and review the results of those tests to identify and respond to potential changes in market conditions that could inversely impact the performance of the financial institution. The results of the stress test shall be made available to BoM for examination.

    BoM will assess the adequacy of processes, procedures, and policies put in place by a financial institution to ensure that it does not face excessive concentration risk by way of over exposure to a customer, sector, interlinked industries, and financial institutions, among others. When the risks arising from credit risk concentrations are not adequately addressed, BoM may take appropriate action, including prohibiting the institution from taking additional exposure and imposing a higher capital charge. Any financial institution, which is in non-compliance with the requirements of this guideline, shall within three months of the coming into effect of this guideline submit a plan showing the manner in which it will achieve compliance. This guideline has been intended to align the current BoM framework with the BCBS norms in the standard on “Supervisory Framework for measuring and controlling large exposures,” which was published in April 2014.


    Related Links 

    Effective Date: August 22, 2019

    Keywords: Middle East and Africa, Mauritius, Banking, Concentration Risk, Credit Risk, Large Exposures, Guideline, BoM

    Featured Experts
    Related Articles

    BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks

    The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.

    March 13, 2023 WebPage Regulatory News

    OSFI Finalizes on Climate Risk Guideline, Issues Other Updates

    The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.

    March 12, 2023 WebPage Regulatory News

    BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending

    BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.

    March 03, 2023 WebPage Regulatory News

    HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks

    The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.

    March 02, 2023 WebPage Regulatory News

    BCBS Report Examines Impact of Basel III Framework for Banks

    The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.

    February 28, 2023 WebPage Regulatory News

    PRA Consults on Prudential Rules for "Simpler-Regime" Firms

    Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.

    February 28, 2023 WebPage Regulatory News

    DNB Publishes Multiple Reporting Updates for Banks

    DNB, the central bank of Netherlands, updated the list of additional reporting requests and published additional data quality checks and XBRL-Formula linkbase documents for the first quarter of 2023.

    February 28, 2023 WebPage Regulatory News

    NBB Sets Out Climate Risk Expectations, Issues Reporting Updates

    The National Bank of Belgium (NBB) published a communication on climate-related and environmental risks, issued an update on XBRL reporting

    February 24, 2023 WebPage Regulatory News

    EBA Updates Address Securitization Standards and DGS Guidelines

    The European Banking Authority (EBA) published the final draft of the regulatory technical standards that set out conditions for assessment of homogeneity of the underlying exposures in simple, transparent, and standardized (STS) securitizations.

    February 21, 2023 WebPage Regulatory News

    FSB Publishes Letter to G20, Sets Out Work Priorities for 2023

    The Financial Stability Board (FSB) published a letter intended for the G20 Finance Ministers and Central Bank Governors, highlighting the work that FSB will take forward under the Indian G20 Presidency in 2023

    February 20, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8793