Related documents
Seychelles
Financial Institutions Act
Financial Institutions (Credit Classification and Provisioning) Regulations
Statutory Instrument 74 of 2010
- Commenced on 15 November 2010
- [This is the version of this document from 23 April 2019.]
- [Note: The original publication document is not available and this content could not be verified.]
1. Citation
These Regulations may be cited as the Financial Institutions (Credit Classification and Provisioning) Regulations.2. Interpretation
In these Regulations—“Board of Directors” means the highest body of authority in a bank responsible for strategically guiding the bank, effectively monitoring management and properly accounting to shareholders;“Book Value” means the value of an asset as stated on the books of account of a bank being the amount of the bank's investment in the asset less any specific and/or general provisions for loss;“Core Capital” otherwise referred to as Tier 1 capital, means permanent capital for the purpose of computing risk weighted capital adequacy ratio;“Credit” has the meaning given in section 2 of the Act;“Credit Concentration” means an exposure to a customer, or group of closely-related customers that meets or exceeds 25 percent of Core Capital;“Eligible Collateral” means the “net realizable” value of the following assets, provided that the bank's interest therein is fully enforceable—(a)Balances with banks;(b)Debt security, provided that the issuer is one of the following(i)The Government of Seychelles;(ii)A Government of a member country of the Organization of Economic Cooperation and Development (OECD); or(iii)A Government of a country with a current consensus country risk classification of 1 or 2, as published by the OECD;(c)Guarantee, provided that the guarantee meets the following criteria—(i)The guarantee is issued by—(a)The Government of Seychelles;(b)A Government of a member country of the OECD;(c)A Government of a country with a current consensus country risk classification of 1 or 2, as published by the OECD; or(d)A bank with an independent credit assessment of AAA to AA - issued by an external credit assessment institution acceptable to the Central Bank;(ii)The guarantee represents a direct claim on the guarantor;(iii)The guarantee is denominated in the same currency as the credit;(iv)The guarantee clearly and incontrovertibly defines the extent of the guarantee's cover of a specific credit;(v)The guarantee is irrevocable and non-cancellable by the guarantor, except for non-repayment of the credit protection contract;(vi)The guarantee has no clause in the credit protection contract that would allow the guarantor unilaterally to cancel the guarantee, increase the effective cost of the guarantee, or delay payment under the guarantee for any reason including the need to be funded in the budget;(vii)The only condition required to be met for the guarantee to be called or enforced is the obligor's failure to meet his obligation to the bank; and(viii)The guarantee is executed so that neither the guarantor nor any other person is in a position to challenge the legal rights of the bank in calling or enforcing the guarantee;(d)the amount of 50 percent of the net realizable value of other tangible securities as approved by Central Bank.“Group of Closely-Related Customers” has the meaning given in section 2 of the Act;“Large Exposure” means an exposure to a customer, or group of closely-related customers, that meets or exceeds 10 percent of Core Capital but represents less than 25 percent of Core Capital;“Net Credit Balance” means the outstanding principal balance of a credit less the “net realizable value” of any “eligible collateral;”“Net Realizable Value” means the estimated selling price of an asset in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to sell the asset;“Non-Performing Credit” means credit that is classified as Substandard, Doubtful, or Loss in accordance with these Regulations.“Renegotiated credit” means a credit which has been refinanced, rescheduled, rolled over or otherwise modified because of weaknesses in the borrower’s financial position or non repayment of the debt according to the original terms.3. Application
4. Requirements for a bank's credit classification process
5. Credit classification categories
A bank's credits are classified on the basis of credit risk into the following five categories using the stated criteria—6. Re-negotiated credits
7. Minimum provisioning requirements
8. Reconciliation with International Financial Reporting Standard IFRS 9
The following requirement shall apply to banks reporting under International Financial Reporting Standard (IFRS)—9. Write-off
10. Income recognition requirements
11. Acquisition of asset in lieu of repayment of credit
12. Restrictions
13. Management information system and reporting requirements
History of this document
23 April 2019 this version
01 December 2014
Consolidation
Read this version
15 November 2010
Commenced