Read e-book online Bank Loan Classification and Provisioning Practices in PDF

By World Bank

ISBN-10: 058546331X

ISBN-13: 9780585463315

ISBN-10: 0821353977

ISBN-13: 9780821353974

This document stories mortgage category and provisioning practices in a vast pattern of nations that change in measurement, situation, and point of economic improvement. The survey carried out for this e-book compares the regulatory ways followed by way of commercial and rising economies, and is meant to counterpoint different resources of data that attention completely on both business or constructing international locations. This record info mortgage classifications and provisioning practices triumphing within the 23 jurisdictions represented within the Basel center rules Liaison workforce on the finish of 2001. It contains classifications of person and a number of loans, therapy of promises and collateral, financial institution mortgage overview techniques, mortgage loss provisioning, tax therapy of personal loan loss provisions, disclosure criteria, and exterior auditors' position.

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Countries that have defined specific provisioning requirements for collateralized assets include Argentina, Hong Kong, India, and Spain. 23 G-10 France a Germanyb Italy Japan Netherlands United Kingdom United States Non-G-10 Argentinag With collateral Without collateral Australia Brazil Chile China Czech Republic Hong Kong Fully secured Partly secured/ unsecured India With collateral Without collateral Korea, Rep. 5 1 - 5 5 4 5 7m 4 - Yes Yes No No No No No Yes No No Yes No No Yesj No 5 5 -h 9i 5 5 5 3 4 5c 5 5f Yes Yes Yes Yes Yes Yes Yes 3 3–6 Over 12 3–6 12 25 5–39 25 20 20–25k 10 20 20 - 1–3 Up to 12 Up to 3 - 6–18 - Up to 6e - 15 - Months overdue Substandard Provisions (%) Up to 3 Up to 3 - Months overdue Special mention Provisions Pass (%) -d - of loan categories Number - Discretionary TABLE 6.

Loans have to be classified as nonperforming once principal or interest is past due for three months or more. p. The entire asset, not just the late payments, is considered doubtful when it becomes 12 months overdue. q. ” r. Provisions on doubtful assets must equal 10 percent for payments more than 3 months overdue, 25 percent for more than 6 months, 50 percent for more than 12 months, 75 percent for more than 18 months, and 100 percent for more than 21 months. Late payments on mortgages are subject to a longer schedule.

N. Banks are allowed to determine their provisioning policy in consultation with external auditors. o. Banks are required to classify accounts based on the borrower’s financials, credit worthiness, and/or repayment capability. Loans have to be classified as nonperforming once principal or interest is past due for three months or more. p. The entire asset, not just the late payments, is considered doubtful when it becomes 12 months overdue. q. ” r. Provisions on doubtful assets must equal 10 percent for payments more than 3 months overdue, 25 percent for more than 6 months, 50 percent for more than 12 months, 75 percent for more than 18 months, and 100 percent for more than 21 months.

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Bank Loan Classification and Provisioning Practices in Selected Developed and Emerging Countries (World Bank Working Papers) by World Bank


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