Document ID: chunk:federal_register_of_legislation:F2024L01074:body:0:p4
Version: federal_register_of_legislation:F2024L01074
Segment Type: other
Provision Reference: 
Character Range: 8595–11666

an on-balance sheet equivalent;
        6.            credit obligation – means a contractual agreement in which a borrower receives something of value now (usually cash) with the agreement to repay the ADI at some stated date;
        7.           credit risk mitigation (CRM) – means a credit risk mitigation technique that meets the requirements detailed in Attachment E to this Prudential Standard and APS 112 where applicable;
        8.           defaulted exposure – means a non-performing exposure as defined in Prudential Standard APS 220 Credit Risk Management (APS 220);
        9.             dilution risk – means the possibility that the total amount of purchased receivables is reduced through cash or non-cash credits to the receivables' obligors;
       10.             effective maturity (M) – means the remaining effective term of a credit obligation;
       11.           expected loss (EL) – means the average credit loss that the ADI is reasonably expected to experience;
       12.             exposure at default (EAD) – means the gross exposure (including accrued interest) under a facility (i.e. the amount that is legally owed to the ADI) upon the default of a borrower;
       13.         financial institution – has the meaning given in paragraph 34 of this Prudential Standard;
       14.           group of connected borrowers – means a group of connected counterparties that is connected by control or single-risk relationships under Prudential Standard APS 221 Large Exposures (APS 221). Where an ADI assesses that a borrower may form part of more than one group of connected borrowers, the ADI may primarily assign the borrower based on a control relationship rather than a single-risk relationship for the purpose of this Prudential Standard;
       15.           income-producing real estate (IPRE) – has the meaning given in paragraph 31 of this Prudential Standard;
       16.           large corporate – means a corporate counterparty with total consolidated annual revenue greater than $750 million as reported in the audited financial statements of the corporate counterparty or, where the counterparty is part of a group, the audited financial statements of the group. The revenue amount must be based on the average amount calculated over the prior three years, or on the latest amount updated at least every three years by the ADI;
       17.           lenders' mortgage insurance (LMI) – has the meaning given in APS 112;
       18.            loss given default (LGD) – means the ADI's economic loss upon the default of a borrower;
       19.            object finance – has the meaning given in APS 112;
       20.             probability of default (PD) – means the risk of borrower default;
       21.           project finance – has the meaning given in APS 112;
       22.           purchased receivables – means a pool of receivables that has been purchased by the ADI from another entity;
       23.         rating system – means all of the methods, processes, controls, data collection and technology that support the