Regulatory Alerts2021-01-13
Added · Updated
Transitional Arrangements for Regulatory Capital Treatment of IFRS 9 Provisions under Expected Credit Losses
The Bank of Mauritius has introduced transitional arrangements to mitigate the impact of IFRS 9 Expected Credit Loss provisions on regulatory capital for all licensed banks and non-bank deposit-taking institutions. Financial institutions must elect to apply the framework by 15 February 2021, during which they are required to add back a phased proportion of Stage 1 and Stage 2 provisions to their Tier 1 or Common Equity Tier 1 capital while suspending dividend distributions. The regulatory capital add-back is calculated against a December 2019 baseline using a declining transition factor that phases out completely by 2025, with mandatory quarterly reporting to ensure compliance.