Regulatory Alerts2025-07-18
Added · Updated
Supervisory Policy Manual Module CA-G-4: Validating Risk Rating Systems under the IRB Approach
The Hong Kong Monetary Authority issued a revised statutory guideline for validating risk rating systems under the Internal Ratings-Based approach to align with Basel Committee guidance and supervisory experience. The update removes the minimum IRB coverage ratio requirement effective January 2025, granting authorized institutions greater flexibility to combine standardized and IRB methods for calculating credit risk capital charges. This revised module takes effect on 18 July 2025 and applies to all authorized institutions utilizing or seeking to utilize the IRB approach for credit risk exposures.