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  • PIB 4.10 PIB 4.10 Categorisation of Credit Risk Exposures (CR Exposures)

    • PIB 4.10 Guidance

      This section categorises Exposures for the purpose of determining the CRW for CR Exposures, as provided in PIB Rule 4.8.3.

      Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

    • PIB 4.10.1 PIB 4.10.1

      An Authorised Firm must categorise any CR Exposure that is not past due for more than 90 days into one of the following asset classes:

      (a) cash items, which consist of:
      (i) cash and cash equivalents;
      (ii) gold bullion held in the vaults of the Authorised Firm or on an allocated basis in the vaults of another entity to the extent that it is backed by gold bullion liabilities; and
      (iii) all receivable funds arising from transactions that are settled on a DvP basis which are outstanding up to and including the 4th business day after the settlement date;
      (b) central government and Central Bank asset class, which consists of any CR Exposure to a central government or Central Bank;
      (c) the PSE asset class, which consists of any CR Exposure to a PSE;
      (d) the MDB asset class, which consists of any CR Exposure to an MDB;
      (e) bank asset class, which consists of any CR Exposure to a banking institution;
      (f) corporate asset class, which consists of any CR Exposure to any corporation, partnership, sole proprietorship or trustee in respect of a trust, other than Exposures categorised in sub-paragraphs (a) to (e), (g) and (h);
      (g) regulatory retail asset class, which consists of any CR Exposure meeting all of the following conditions:
      (i) the Exposure is to an individual, a group of individuals, or a small business;
      (ii) the Exposure takes the form of any of the following:
      (A) revolving credit and lines of credit, including credit cards and overdrafts;
      (B) personal term loans and leases, including instalment loans, vehicle loans and leases, student and educational loans;
      (C) small business credit facilities and commitments; or
      (D) any other product which the DFSA may specify from time to time;
      (iii) the Exposure is one of a sufficient number of Exposures with similar characteristics such that the risks associated with such lending are reduced; and
      (iv) the total Exposure to any obligor or group of obligors is not more than $2 million;
      (h) residential mortgage asset class, which consists of any CR Exposure meeting all of the following conditions:
      (i) the Exposure is to an individual or a group of individuals, or if the Exposure is to an entity other than an individual, the Authorised Firm can demonstrate to the DFSA (if required to do so) that it has robust processes to ascertain that the Exposure is structured to replicate the risk profile of an Exposure to an individual or a group of individuals and that it is able to identify and manage the legal risks that arise in such structures;
      (ii) the Exposure is secured against a first lien mortgage:
      (A) of a completed residential property; or
      (B) on an exceptional basis of an uncompleted residential property in a jurisdiction approved by the DFSA;
      (iii) the Exposure is not classified as an impaired asset in accordance with Rules in this module; and
      (iv) the Exposure is not to a corporation, partnership, sole proprietorship or trustee in respect of a trust where such corporation, partnership, sole proprietorship or trust is engaged in residential building, development or management;
      (i) the commercial real estate asset class, which consists of any CR Exposure meeting all of the following conditions:
      (i) the Exposure is to a corporation, partnership, sole proprietorship or trustee in respect of a trust; and
      (ii) the Exposure is secured by commercial real estate; or
      (j) other Exposures asset class, which consists of any CR Exposure which does not fall within any of the categories in sub-paragraphs (a) to (i).
      Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

      • PIB 4.10.1 Guidance

        The Exposures listed under item (f) include transactions settled on a payment-versus-payment basis. For avoidance of doubt, the DFSA expects that a CR Exposure to a securities firm should be categorised within the corporate asset class.

        Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]