Regulatory Alerts2014-02-12
Interpretation of Default Definition in Regulation 67 of the Regulations Relating to Banks
The South African Reserve Bank permits banks using the internal rating-based framework to define default via a three missed monthly instalments approach, providing an alternative to the strict day-count standard. Banks must formally notify the regulator of this election, specify and quantify affected portfolios, demonstrate consistent application, and submit a transition action plan where necessary. Non-compliance with either the three missed instalments or strict day-count method triggers mandatory formal submissions detailing remediation measures and timelines.
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