Document ID: chunk:federal_register_of_legislation:F2024L01074:body:0:p10
Version: federal_register_of_legislation:F2024L01074
Segment Type: other
Provision Reference: 
Character Range: 25989–29136

residential mortgage IRB sub-asset class includes exposures that are:
        1.           partly or fully secured by residential real estate;
        2.           managed in a similar manner to other retail exposures; and
        3.           not for business purposes.

Qualifying revolving retail
 1.          The QRR IRB sub-asset class includes exposures that satisfy the following criteria:
        1.           the exposures are revolving, unsecured and unconditionally cancellable (both contractually and in practice) by the ADI. Exposures may be considered unconditionally cancellable if the terms of the contract permit the ADI to cancel at any time any existing credit lines or limits provided to a borrower at the ADI's discretion, and demand immediate repayment for any outstanding balance to the full extent allowable under consumer protection and related legislation;
        2.           the exposures are to individuals and not for business purposes;
        3.           the maximum exposure of an individual account in the sub-portfolio is $100,000; and
        4.           the exposures exhibit, in comparison with other types of retail lending products, low loss rate volatility relative to the average level of loss rates (especially within low PD bands).
 2.          QRR exposures must be further split into exposures to transactors and revolvers. For this purpose:
        1.           a QRR transactor is a borrower that has repaid the balance of their facility in full at each scheduled repayment date for the previous 12 months; and
        2.           a QRR revolver is a borrower that does not meet the criteria for treatment as a QRR transactor. An ADI must treat any QRR exposure with less than 12 months of repayment history as an exposure to a QRR revolver.

Small- and medium-sized enterprise retail
 1.          The SME retail IRB sub-asset class includes exposures that meet the following criteria:
        1.           the total business-related exposure of the ADI to a small-business borrower or group of connected borrowers is less than $1.5 million.  Small-business exposures extended to, or guaranteed by, an individual are subject to the same exposure threshold. For a subsidiary of the ADI operating in a jurisdiction that applies a different threshold for SME retail, as set by the overseas prudential regulator, the ADI may apply that jurisdiction's threshold for the calculation of its Level 2 Regulatory Capital requirement for the relevant exposures;
        2.           the reported consolidated annual revenue of a small-business borrower or group of connected borrowers is less than $75 million;
        3.           both the borrower and exposure are non-complex; and
        4.           the ADI treats small-business exposures in its internal risk management systems in the same manner as other retail exposures consistently over time. This requires that such exposures:
                1.             are originated in a similar manner to other retail exposures; and
                2.          must not be managed individually in a way that is comparable to an exposure in the corporate