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  • Definition of Default / Impairment

    • CM-1.8.6

      Default for the purpose of this Module and impairment in the context of credit risk exposure of an obligor as per IFRS 9 is considered to have occurred with regard to a particular obligor when either or both of the following events have taken place:

      (a) The licensee considers that the obligor is unlikely to pay its credit obligations in full (i.e. principal, interest, fees or any other amount), without taking actions such as realising security (if held).
      (b) The obligor is past due for 90 days or more on any credit obligation to the licensee. In case of overdrafts, the customer will be considered as being past due once an advised limit has been breached or the customer has been advised of a limit smaller than the current outstanding amount.
      Added: June 2022

    • CM-1.8.7

      The elements to be taken as indications of unlikeliness to pay must include, but not be limited to, the following:

      (a) The licensee puts the interest on the credit obligation on non-accrual status;
      (b) The licensee makes a charge-off or account-specific provision resulting from a significant perceived decline in credit quality subsequent to the licensee taking on the exposure;
      (c) The licensee sells the credit obligation at a material credit-related economic loss;
      (d) The licensee consents to a distressed restructuring of the credit obligation where this is likely to result in a diminished financial obligation caused by the material forgiveness, or postponement, of repayment instalments;
      (e) The licensee has filed for the obligor’s bankruptcy or a similar order in respect of the obligor’s credit obligation to the licensee; or
      (f) The obligor has sought or has been placed in bankruptcy or similar protection where this would avoid, or delay, repayment of the credit obligation to the licensee.
      Added: June 2022

    • CM-1.8.8

      For the purpose of CM-1.8.7, distressed restructuring refers to situations when a licensee grants a concession that it would not otherwise consider, irrespective of whether the concession is at the discretion of the licensee or otherwise. Forgiveness means reduction in repayment amount or interest. Postponement could include grace periods or changes in instalments leading to delayed maturity.

      Added: June 2022