Thus, only 24% of total bank exposures may be directed to the tourism sector. Banks will have until July 1, 2015 to comply. This is expected to rise to 22.5% in 2016.
In that it is individuals, the rate should rise from 15% to 12.5% in 2015. Ditto for the construction sector.
These new parameters are the response of the BoM to face the growing phenomenon of debt. The Governor of the BoM, Rundheersing Bheenick, has already sounded the alarm in that it is the credit to the private sector, especially for real estate projects. "We know that there are two or three projects that have failed along the way and this has created problems with the banks concerned. One of these banks even had to inject fresh capital.
The concerns are real if this problem recurs. I do not think we are able to rescue the banking sector, if he enters a crisis. Neither Bank of Mauritius, nor the state can afford to support this sector, such as Ireland and Greece did. We believe that we have reached a situation where we need more caution, "he declared on Radio Plus, last week.
Other recommendations include the responsibility of the board of directors of banks to ensure the development of a policy of credit concentration risk. This policy should be reviewed at least once a year. This policy, according to the BoM should include the principles and objectives governing the acceptance of credit concentration risk.
The BoM also highlights "a financial institution shall at least annually conduct an exercise stress test its major concentrations of credit risk and review the results of these tests to identify and respond to potential changes in conditions market which could have an impact on the performance of the financial institution. The results must be made available to the BoM for consideration. "