BANK 4.3.3 Categories of credits

(1) Unless a banking business firm has established something more detailed, the firm must classify credits into 1 of the 5 categories in table 4.3.3. Nothing in the table prevents a banking business firm from classifying a credit under a higher risk category than the table requires.
(2) Unless there is good reason not to do so, the same category must be given to all credit exposures to the same counterparty.

Table 4.3.3 Categories of credit

column 1 item column 2 category column 3 description
1 performing In this category, there is no uncertainty about timely repayment of the outstanding amounts. This category comprises credits that are currently in regular payment status with prompt payments.
2 special mention This category comprises:
(a) credits with deteriorating or potentially deteriorating credit quality that may adversely affect the counterparty's ability to make scheduled payments on time;
(b) credits that are 30 to 90 days in arrears;
(c) credits showing weakness arising from the customer's financial position;
(d) credits affected by market circumstances or any other industry-related concerns; and
(e) credits that have been restructured and are not classified into a higher risk category.
3 substandard This category comprises:
(a) credits that show definite deterioration in credit quality and impaired repayment ability of the counterparty; and
(b) credits that are 91 to 180 days in arrears.
4 doubtful This category comprises:
(a) credits that show significant credit quality deterioration, worse than those in the substandard category, to the extent that the prospect of full recovery of all the outstanding amounts is questionable and the probability of a credit loss is high (though the exact amount of loss cannot be determined yet); and
(b) credits that are 181 to 270 days in arrears.
5 loss This category comprises:
(a) credits that are assessed as uncollectable;
(b) credits where the probability of recovering the amount due is very low; and
(c) credits that are more than 270 days in arrears.

Derived from QFCRA RM/2014-2 (as from 1st January 2015).