Regulatory Alerts2020-03-31
Instruction No. 03 GR/2020 Partially Amending Instruction 05/GR/2014 on the Classification of Claims and Provisioning
The Governor of the Central Bank of Mauritania issued Instruction No. 03 GR/2020 to partially amend the classification and provisioning rules for credit institutions. The directive mandates that banks remove compromised claims from their balance sheets when written off, recovery prospects are nil, or five years have elapsed since Class D reclassification, while requiring full prior provisioning and Board of Directors authorization. Credit institutions must comply with these off-balance sheet tracking, reporting, and related-party disclosure requirements by December 31, 2020.
République Islamique de Mauritanie Le Gouverneur
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BANQUE CENTRALE DE MAURITANIE Nouakchott, August 3, 2020
Instruction No. 03 GR/2020 Partially Amending Instruction 05/GR/2014 Regulating the Classification of Claims and Provisioning
The Governor of the Central Bank of Mauritania, Having regard to Law No. 73-118 of May 30, 1973 establishing the Central Bank of Mauritania; Having regard to Law No. 2018-034 of August 8, 2018 on the Statutes of the Central Bank of Mauritania; Having regard to Law No. 2018-036 bis/PR of August 16, 2018 on the Regulation of Credit Institutions; Having regard to Decree No. 08-2020 of January 21, 2020 appointing the Governor of the Central Bank of Mauritania; Having regard to Instruction No. 05/GR/2014 of June 24, 2014 Regulating the Classification of Claims and Provisioning; Decides:
Article 1. Credit institutions must remove compromised claims held in their portfolios from their balance sheets and ensure off-balance sheet tracking once any of the following conditions is met:
- The claim has been written off;
- Recovery prospects for the claim are nil, despite any ongoing or pending amicable or judicial actions;
- A period of five (05) years has elapsed since the claim was reclassified into Class D (compromised claim).
Claims are removed from the balance sheet at their gross accounting amount, offset against the loss account for irrecoverable claims. Any specific provision previously established is reversed to the income statement. Claims removed from the balance sheet are subject to appropriate management and control within a "substance accounting" system. Any removal of claims from the balance sheet under this Article must be previously authorized by the Board of Directors. Claims removed from the balance sheet must be reported to the Central Credit Registry for frozen claims. Institutions must communicate to the BCM, according to modalities set by it, the details of commitments with related parties, as defined by Instruction No. 08/GR/2012, which have been removed from the balance sheet under this Article.
Article 2. Credit institutions are required to fully provision claims before their removal from the balance sheet.
Article 3. Credit institutions have until December 31, 2020 to comply with this Instruction.
Article 4. This Instruction repeals and replaces any prior contrary provisions, notably Article 23 of Instruction No. 05/GR/2014 of June 24, 2014 Regulating the Classification of Claims and Provisioning. It enters into force as of its signature date.
Cheikh El Kebir Moulaye Taher