In a year when we were deluged with FDI inflows and the Bank had to intervene in the market to mop up excess liquidity through the issue of Bank of Mauritius Bills in exchange for foreign exchange assets that we purchased, we felt the need for dynamic provisioning because of very clear “negative carry” in these transactions.
However, our pioneering attempt to apply this approach had to be undone in the midst of much incomprehension and recrimination.