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Dubai Financial Services Authority (DFSA): Contents

Dubai Financial Services Authority (DFSA)
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Prudential — Investment, Insurance Intermediation and Banking Module (PIB) [VER33/02-19]
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  Versions
(1 version)
 
Dec 9 2012 onwards

PIB 4.4.3



Whole Section PDF

The definitive version of DFSA handbook text is the PDF version as that is the text of the instrument as made and published by the DFSA.

To view past versions of this module in PDF format, please visit the Archive.

The Credit RiskG policy must:

(a) be consistent with the approved Credit RiskG strategy, considering a range of factors, including but not limited to an approved degree of risk tolerance, capital allocated to Credit RisksG , business strategy and market conditions in its main credit markets;
(b) provide sound, well-defined Credit RiskG norms and criteria for approval of credit applications;
(c) clearly specify the ExposureG limits, product types, business segments, nature of target borrowers and the nature of Credit RiskG that the Authorised FirmG wishes to incur;
(d) set out, where appropriate, the amounts and terms and conditions under which CounterpartiesG or clients may be eligible or ineligible for credit;
(e) include minimum information that is required to be obtained for processing an application for credit;
(f) include well defined criteria and policies for approving new ExposuresG as well as renewing and refinancing existing ExposuresG , identifying the appropriate approval authority for the size and complexity of the ExposuresG ;
(g) include effective credit administration policies, including continued analysis of a borrower's ability and willingness to repay under the terms of the debt, monitoring of documentation, legal covenants, contractual requirements and CollateralG , and a classification system that is consistent with the nature, size and complexity of the Authorised Firm'sG activities or, at the least, with the asset grading system prescribed in PIB Rule 4.5.4;
(h) include comprehensive policies for reporting ExposuresG on an on-going basis;
(i) include comprehensive policies for identifying and managing problem assets;
(j) include a provisioning policy approved by the Governing BodyG which ensures that all loans are promptly and prudently provided for;
(k) set out limits and approval processes involved for the approval of credit facilities that can be approved by the delegated authorities, and stipulate that the Governing BodyG retains responsibility for the governance of such limits;
(l) require that major Credit RiskG ExposuresG exceeding a specified amount or at a minimum all Large ExposuresG of the Authorised FirmG are approved by the Authorised Firm'sG senior management or its designated body like credit committee; and
(m) require that all Credit RiskG ExposuresG that are especially risky or inconsistent with the approved credit strategy of the Authorised FirmG are approved by the Authorised Firm'sG senior management or its designated body such as a credit committee.
Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]