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IFRS 9 Implementation: CBO Issues Detailed Guidelines   (13/04/2017)

Central Bank of Oman has issued elaborate and detailed guidelines on the implementation of IFRS 9 on financial instruments, directing banks and FLCs to ensure its high quality implementation that results in reliable measurement of capital and augments market discipline through greater transparency.

In the BM Circular 1149, issued on 13th April 2017, and addressed to all licensed banks and FLCs operating in the Sultanate, H.E The Executive President of CBO noted that while the responsibility of preparing and ensuring fair presentation of the financial statements of a bank/FLC vests primarily with its Board, the Central Bank of Oman is interested in a high quality implementation of IFRS 9 that results in reliable measurement of capital and augments market discipline through greater transparency.

"Therefore, these guidelines are not intended to override IFRS 9 and instead endeavour to promote consistency of application, facilitate greater comparability across the financial sector and address supervisory concerns," H.E. advised.

However, HE reminded that nothing should prevent banks and FLCs from applying more conservative criteria or requirements in accordance with IFRS, than those laid out in this guidance.

In the 19 page-document, CBO issued several advisories and directives to the banks and FLCs on a host of topics pertaining to implemention of IFRS 9, such as classification of financial instruments, impairment of financial assets, disclosures and reporting requirements, etc.

Issuing advisories on disclosures and reporting requirements, CBO directed Banks and FLCs to endeavour to comply with the disclosure requirements as laid down in IFRS 9 read with IFRS 7- Financial Instruments: Disclosures and IFRS 13- Fair Value Measurement in both letter and spirit, especially in regard to the classification of financial assets, fair value hierarchy and impairment allowances.

Additionally, CBO advised that banks and FLCs should continue to maintain and update the risk classification (i.e. standard, special mention, substandard, etc.) of accounts as per the extant CBO norms, including those on restructuring of loan accounts for regulatory reporting purposes, while prescribing an indicative template that maps IFRS 9 impairment provisions to CBO requirements.

For full details kindly read the BM Circular 1149 here