The Banking Supervisory Authority in accordance to MOU with IMF amended related regulations to enhance prudential regulation on commercial banks.
The following details the core contents of the amendment that will go into effect July 1, 1998.
- Strengthening of prudential regulation on overdue loans to incorporate international standards
Classification | Prior to Amendment | Amended Criteria |
Normal | loans in arrears by less than 3 months | loans in arrears by less than 1 month |
Precautionary | loans in arrears by 3 months to less than 6 months | loans in arrears by 1 month to less than 3 months |
Substandard and below | loans in arrears by no less than 6 months | loans in arrears by no less than 3 months |
- Provisioning requirements for precautionary loans will be increased from 1% to 2%
- Non-tradable securities (privately-placed bonds, commercial papers and guaranteed bills) of trust accounts will be subject to loss provisioning (provisionsing for bond amortization)