Document ID: chunk:federal_register_of_legislation:F2022L01576:body:0:p15
Version: federal_register_of_legislation:F2022L01576
Segment Type: other
Provision Reference: 
Character Range: 40221–43338

maintain reasonably current assessments of the extent of credit risk attaching to these transactions.

Reclassification of non-performing exposures to performing
95.         An ADI may reclassify an exposure from non-performing to performing when all of the following criteria are met:
       (a)          the borrower does not have any exposure 90 days or more past-due;
       (b)          repayments have been made when due over a continuous repayment period of at least 90 days, except for restructured exposures for which repayments, as per the revised contractual terms, must have been made in a timely manner over a continuous repayment period of not less than six months (the probation period);
       (c)          the borrower's situation has improved so that the full repayment of the exposure is likely, according to the original or, when applicable, modified conditions; and
       (d)          the exposure does not meet the definition of non-performing in paragraph 13(a).
96.         An ADI must not reclassify a non-performing exposure as performing in the following circumstances:
       (a)          partial write-off of an existing non-performing exposure (i.e. when an ADI writes-off part of a non-performing exposure that it deems to be uncollectible);
       (b)          repossession of collateral on a non-performing exposure, until the collateral is actually disposed of and the ADI realises the proceeds; or
       (c)          extension or granting of restructure measures to an exposure that is already identified as non-performing subject to the relevant exit criteria for non-performing exposures (refer to paragraphs 95(a) to 95(d)).
97.         The reclassification of a non-performing exposure as performing must be made on the same level (such as a borrower or transaction approach) as when the exposure was originally categorised as non-performing.

Restructured exposures
98.         Any restructuring of an exposure must be supported by a current, well-documented credit evaluation of the borrower's financial condition and prospects for repayment under the modified terms. Renegotiation of an exposure must not be used to obscure the poor quality of a loan's or other financial instrument's performance, or avoid an increase in provisions. Before any concession is made to a borrower, the appropriate level of the ADI's management must approve the restructure.
99.         Restructure may be granted on performing or non-performing exposures. When restructure is applied to a non-performing exposure, the exposure must continue to be classified as non-performing. When restructure is applied to a performing exposure, the ADI must assess whether the exposure meets the definition of non-performing, even if the restructure resulted in a new exposure. If the assessment is that the original exposure would have been treated as non-performing at the time of restructure, had the restructure not been granted, the new exposure must be treated as non-performing.
100.     An ADI must monitor the appropriate categorisation of exposures on which restructure has been granted more than