Regulatory Alerts2021-06-29
Added · Updated
MAS Notice 1005 Credit Files, Grading and Provisioning
Merchant banks in Singapore must maintain comprehensive credit files containing adequate borrower and facility information to enable effective monitoring and audit. The notice requires regular systematic reviews and categorization of credit facilities into five specific grades: pass, special mention, substandard, doubtful, and loss, with defined criteria for each. It mandates specific classification rules for past-due amounts, restructured facilities, and the use of split grades for collateralized portions. Additionally, merchant banks must establish robust processes for recognizing loss allowances for expected credit losses in accordance with FRS 109, including maintaining a minimum regulatory loss allowance of 1% of gross carrying amounts for Singapore-incorporated banks if it exceeds the accounting loss allowance.
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