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  • RM-2.5 RM-2.5 Treatment of Profit/Interest in Suspense and Provisioning

    • Non-accrual of Profit/Interest Income

      • RM-2.5.1

        Licensees are required to place on a non-accrual basis any facility where there is reasonable doubt about the collectability of the receivable irrespective of whether the facility is overdue or not. All accrued profit/interest, including related interest/profit earned but not collected and recognised as income in prior periods, for non-accrual assets identified in Paragraph RM-2.5.2 must be credited to an off-balance sheet special account in the licensee's records under the name 'profit/interest in suspense account' and not to the profit and loss account, i.e. it must not be recognised as income.

        July 2014

      • RM-2.5.2

        For the purpose of this Module, the following 'non-performing' categories of assets must be considered as non-accrual items:

        (a) Substandard;
        (b) Doubtful;
        (c) Loss; and
        (d) Any other credit facilities that are overdue for a period of less than 90 days but the licensee has doubts about their collectability.
        July 2014

    • Treatment of Restructured and Rescheduled Facilities and Facilities Which Cease to be Non-performing

      • RM-2.5.3

        Any facility where principal or profit/interest is 90 days or more overdue must be categorised as 'non-performing'. A facility becomes overdue from the first date that profit/interest or principal is not received.

        July 2014

      • RM-2.5.4

        For purposes of Paragraph RM-2.5.3, if an instalment is missed on 1st March 2010, but payment is made on 1st April 2010 (and the March instalment is still not paid), then the credit facility will become over 90 days overdue by 1st June 2010, even if the April and May instalments are paid on time and in full, and a provision must at least be taken in respect of the overdue amount (but not necessarily the full outstanding amount of the credit facility if other payments were made).

        July 2014

      • RM-2.5.5

        If a non-performing credit facility is formally rescheduled (by way of a written agreement), the rescheduled credit facility may be considered 'performing' again (as 'standard') after a period of one year from the date of rescheduling if all payments have been made on schedule and the concerned provisions and suspended profit/interest may be credited (back) to the profit & loss account.

        July 2014

      • RM-2.5.6

        If a facility ceases to be non-performing (due to full repayment of all arrears on profit/interest and principal) it may be categorised as performing after a period of one year and the concerned provisions and suspended profit/interest may be credited (back) to the profit & loss account.

        July 2014