Guidance note on the extension of deadlines for banks and MFIs in the WAMU region
In order to ensure the continuity of the activities of financial institutions in facing Covid-19, BCEAO and ADA are publishing a guidance note on the extension of deadlines for banks and MFIs in the WAMU region.
Several tools have already been released to ensure the continuity of the activities of financial institutions to face Covid-19.
One of the measures proposed by the BCEAO (Central Bank of West African States) is the extension of deadlines for banks and MFIs (microfinance institutions). It is important that this measure is applied on a structured and harmonised basis.
To respond to this concern, ADA, in its support process for the microfinance sector, proposes an operational guide with an accounting framework for the management of maturity extensions, to be integrated into the information system.
These observations help to better reflect the provisions of the BCEAO Opinion on the extension of deadlines by the Decentralized Financial Systems.
The guidance note on the extension of deadlines for banks and MFIs in the WAMU region is structured as follows:
- The definition of the concept of maturity deferral in order to better agree on the practical modalities of deferral, and to avoid possible misunderstandings that could eventually affect the repayment of the loan and the customer relationship;
- The technical and accounting implications of maturity deferral: as maturity deferral is an exceptional situation, its management and treatment are not foreseen in the current operational framework of MFIs; the guide has foreseen how to integrate it into the system from now on, and to ensure that it is applied in a homogeneous and harmonised way by all MFIs. It also defined the role and support of the software developers for the necessary updates and settings;
- The chart of accounts to be implemented: the guide proposed the different accounts to be used, in accordance with the reference framework and specific instructions of the BCEAO, the commented posting diagrams for the accounting management of maturity deferral operations and the associated reporting;
- The internal control system to oversee the system: it contains in particular: i) identification of eligible credits; ii) awareness raising and registration of carry-over requests; iii) authorisation/validation of requests; iv) execution of entries; and v) supervision and control of the system.