Document ID: chunk:federal_register_of_legislation:F2022L01576:body:0:p24
Version: federal_register_of_legislation:F2022L01576
Segment Type: other
Provision Reference: 
Character Range: 65024–67946

lenders mortgage insurance, to the valuation of the security is greater than 100 per cent, are included.
14.         The minimum provision for these items is a percentage of the balance outstanding, where the percentage depends upon the term of payments past-due. An ADI must apply the minimum provisions for Category Three exposures in Table 2.
Table 2: Category Three exposures
    Term of payments past–due           Amount of Provision (%)
   Up to 90 days                        0
   90 days and less than 182 days       40
   182 days and less than 273 days      60
   273 days and less than 365 days      80
   365 days and over                    100

15.         Where an exposure is secured by a mortgage over a residential property, the provision may be adjusted to reflect a part of the fair value of security held. When this occurs, the minimum provision percentage in the table above must be applied to the difference between the outstanding balance less any lenders' mortgage insurance and 70 per cent of the security value, where the exposure is 90 days or more worth of payments past-due, and the valuation is not older than 12 months. Where an exposure is secured by collateral other than residential property, an ADI may approach APRA to discuss an appropriate basis upon which to value security held.
16.         Where an exposure is otherwise secured by equivalent or better security arrangements than that described in paragraph 15 of this Attachment, an ADI may, on application to APRA, seek to have the provision adjusted to reflect the whole or part of the fair value of security held. APRA may agree to an adjustment if it is satisfied that the provision, as adjusted, more appropriately covers the risk on the exposures. APRA will apply the following guidelines in considering the application:
       (a)          guarantees provided by Commonwealth or State Governments, or ADIs, may be deducted from the full value of the exposure prior to applying the prescribed provisioning requirements;
       (b)          Crown leases involving property used for residential purposes may be adjusted in accordance with this Attachment;

       (c)          bank bills and government securities held as collateral, if subject to enforceable security in favour of the ADI, may be deducted from the value of the exposure at their fair value prior to applying the prescribed provisioning requirements; and

       (d)          cash on deposit with the ADI may only be deducted from the full value of the exposure prior to applying the prescribed provisioning requirements for the purposes of prescribed provisioning where the deposits are secured by appropriate contractual arrangements that satisfy the eligible collateral provisions contained in APS 112. A right of offset is not considered to provide appropriate security per se.

Category Four exposures
17.         This category applies to overdrawn