For commercial and corporate facilities, the bank is required to use the above classification unless it can demonstrate, based on evidence and sound judgment, that the listed criteria for a specific facility is not the best indication of impairment. In this case, the bank can classify the loan to an alternate category (higher or lower).

This process needs to be well documented, based on the bank’s board approved internal provisioning policy and follow a clear decision making criteria. Particular attention will be paid to restructured facilities or those where outstanding interest has been capitalized. The evidence should be presented to the Central Bank upon request.

If in doubt over the classification of a particular facility, please do not hesitate to contact your Supervisor at the Central Bank.