TABLE OF CONTENTS
Foreword ............... .... .. .......................................... v
Ahstract .......................................... .............. vii
Acknowledgments ............. ............................................ ix
1 Introduction ............. ...................... 1
2 Regulatory and Supervisory Authority ........ .......... ...................... 5
3 Loan Classification .......... . ................ ............................ 9
4 Classification of Multiple Loans ................... .......................... 11
5 Guarantees and Collateral ........ . ........................................ 13
6 Loan Reviews by Banks .................. .. .......... ................... 17
7 Classification of Restructured Troubled Loans ... . ... ......................... 19
8 Provisioning Issues .23
9 Monutonng and Enforcement .............. ............. .................. 33
10 The Tax Treatment of Loan Loss Provisions ....................... .. ......... 37
11 Disclosure ........................ ................................... 41
12 The Role of External Auditors . ......... ............ 45
13 Conclusion ................................................... ........ 47
References .......... .......................... 49
TABLES
Table 1 Bank Supervisors' Authority to Issue Loan Classification Rules .6
Table 2 Classification Approaches to Multiple Loans to the Same Borrower .12
Table 3 Guidelines for Valuing Collateral for Loan Classification
and Provisioning .14
Table 4 Loan Review Procedures .. ......... . . .... ............. ...... 18
Table 5 Classification Rules for Restructured Troubled Loans ........................ 20
Table 6 Loan Classifications and Provisions for Domestic Loans ............. ........ 24
Table 7 General Provisions for Loan Losses ..... ............. .................. 26
Table 8 Limits on the Inclusion of General Provisions in Tier I and Tier II Capital .28
Table 9 Sovereign and Retail Lending Risk .......... .................... ....... 30
Table 10 Enforcement Powers .................... .......... ......... ....... 35
Table 11 Tax Deductibility of Specific and General Provisions .38
Table 12 Public Disclosure of Loan Classifications .. ............................... 42
Table 13 Roles, Responsibilities, and Penalties for External Auditors ......... . ......... 46