6.1

A Default is considered to have occurred with regard to a particular Obligor when at least one of the following events have taken place: (a) non-payment and/or (b) unlikeliness to pay.
 

Non-payment
 

6.2

Non-payment is considered to have occurred when a material credit obligation to the LFI is Past Due for a period greater than 90 days.
 

6.3

Overdrafts are considered Past Due once the Obligor has breached a contractual or internal limit, or has been advised of a limit smaller than the current outstanding.
 

Unlikeliness to pay
 

6.4

Unlikeliness to pay is considered to have occurred when it is unlikely that the Obligor will pay its credit obligations to the LFI in full.
 

6.5

For the purpose of the evaluation of the unlikeliness to pay, LFIs must establish and document a set of criteria and early warning signals. The early identification of decline in creditworthiness must be based on both financial and non-financial indicators.