Transcription of Guideline on loan classification system
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Guideline on loan classification system
MA(BS)2A/Appendix2/P. 1 (May 99)Appendix 2 Guideline on loan classification Guideline sets out the loan classification framework adopted by the HongKong Monetary Authority ( HKMA ) for monitoring the asset quality andprovisioning adequacy of authorized purpose of a loan classification system is to enable institutions to prudentlyvalue loans and to act as a guide to appropriate provisions. The HKMA s systemwas first introduced in 1994. Details of the loan classification framework werepreviously embodied in the completion instructions of the Quarterly Analysis ofLoans and Advances and Provisions Return (MA(BS)2A). The classificationframework outlined in this paper is largely the same as the one introduced in1994. The only major change is the inclusion of investment debt securities in theloan classification system as they carry similar credit risk as loans and recommendations on the accrual of interest are deleted, as this area is nowaddressed by the HKMA s Guideline on Recognition of Interest.
expected to pay the bill (i.e. the acceptor or the drawee). However, they may also apply to the customer of the institution from whom the institution has purchased the bill on a recourse basis. The classification should generally be based on whether or not the bill is current except where the …
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