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Effective from Jul 01 2020 - Jun 30 2020 To view other versions open the versions tab on the right
Once an early warning signal is identified, based on the criteria explained above, the unit responsible for managing EWS, needs to flag the potentially problematic loan to the relationship officer / respective portfolio manager in charge of the borrower's relationship.
The cause and severity of the EWS is assessed and based on the assessment the borrowers can be categorized as ‘watch list'. Following are the two potential scenarios:
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Loans remain performing while on the watch list and will be brought back to regular loans after some time, and
•
The credit quality of the loan continues to deteriorate and it is transferred to the bank’s Workout Unit (Remedial / Restructuring etc.).
Once the borrower is classified as watch list, the bank should decide, document and implement appropriate corrective actions (within the specified timeframe) in order to mitigate further worsening of loan's credit quality.
Corrective action might include:
i.
Securing additional collateral or guarantee (if considered necessary).
ii.
Performing more regular site visits.
iii.
More frequent updates to the credit committee.
iv.
Assessment of financial projections and forecast loan service capacity.
