of september 2013, non - performing loans accounted for 3. 5 per cent of gross loans, against 3. 1 per cent a year earlier. we are closely monitoring the evolution in credit quality. the cover ratio ( specific provision to non - performing loans ) was 41. 3 per cent in september 2013. bis central bankers ’ speeches 39. 3 banks continued to expand their domestic network with six additional branches set up in 2013. this brought the total number of branches, including head offices, of banks operating in mauritius to 227 at the end of december 2013, while there were a total of 450 atm ’ s compared with 441 at the end of december 2012. click here to return to main document 41. 1 macroprudential measures. the global financial crisis underscored the necessity to rely on macroprudential regulation, in addition to other measures, as a policy tool to curb potential systemic risk. the bank introduced the following five macroprudential measures in october 2013 : a. the loan - to - value ( ltv ) ratio aims at constraining excessive credit growth and restricting losses in the event of customer default, or decline in property prices, by imposing a cap on the size of the loans relative to the value of the properties financed. the bank introduced the maximum ltv limits as a macroprudential measure to discourage speculation, prevent excessive leverage, and reduce systemic risk associated with the rapid expansion of credit in the construction sector. customers borrowing from banks to purchase property for the first time will not be affected by these measures. b. the debt - to income ( dti ) ratio provides protection to households from debt traps and aims at containing housing credit growth. banks in mauritius use the dti as a microprudential measure to assess borrowers ’ repayment capability. concerned with the growing level of household indebtedness, we introduced the dti ratio to ensure that borrowers are not overleveraged whenever they borrow for the purchase or construction of a property. c. the three additional macroprudential measures consist of risk - weighted assets, additional portfolio provisions, and sectoral limits. the measure on risk - weighted assets requires banks to maintain higher risk weights in the targeted borrower segments. the additional portfolio provision ensures early provisioning against future credit losses in more vulnerable sectors. the objective behind the sectoral credit limits is to contain exposure of banks to three sectors, namely, commercial, residential and land parceling, tourism and personal. overall, these

rate, libor, rigging foreign exchange markets, and collusion among banks to undermine a government programme as in hungary. bank executives, directors, and traders have been fired or jailed. regulators are becoming unyielding in bringing offenders to justice. over time, it is expected that banks and other financial institutions will have to improve their internal controls to prevent irregularities and improper behaviour. 12. trends in global and domestic monetary policy. the recent years of global economic mayhem have put monetary policy to a severe test. central bankers everywhere have been scratching their head, reflecting on the ideal approaches to monetary policy formulation in the post - global - financial - crisis era. faced with tough monetary policy dilemmas, many large central banks, grappling with the zero lower bound, resorted to “ forward guidance ” as an additional tool in their arsenal, with a focus on signalling their monetary policy intentions through an enhanced communication strategy. the prolonged period of ultra - loose monetary policies around the world brought to the forefront issues such as asset price bubbles, volatile capital flows, dollarization, and imported instability. the twists and turns of monetary policy in major economies have rocked the boat for smaller central banks, pushing them in uncharted waters, and forcing them to intervene to combat currency appreciation that threatened to throw their economies out of kilter if left unchecked. 13. such has indeed been the case for mauritius, where the situation is further complicated by two idiosyncratic factors. first is the entrenched divergence of opinion among monetary policy committee ( mpc ) members, which surfaced during the year, pitting bank executives against “ external ” members. unlike the situation in most developing economies, our mpc comprises a majority of external members who outnumber the bank members 5 – 3. a second issue is the raging controversy around growth versus inflation, with the bank resolutely sticking to its last and not allowing itself to stray from its core mandate of price stability. mercifully, the vociferous calls from some policy quarters and interested exporters ’ lobbies for currency depreciation, which engulfed the bank in the first half of 2012, were no longer heard. the voting pattern in the mpc inevitably weighs on the overall credibility of the monetary policy decision - making process. the time is ripe for a review of legislation to give bis central bankers ’ speeches the bank operational independence in the formulation and implementation of monetary policy as is the case not just in most developing economies,