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Question

The term “SICR” discussed in the recently published RBI's released Discussion Paper on Introduction of Expected Credit Loss (ECL) Framework for Provisioning by Banks stands for?

A Significant Increase in Credit Risk Correct Answer Incorrect Answer
B Systematic Internal Credit Rating Correct Answer Incorrect Answer
C Standardized Internal Credit Reporting Correct Answer Incorrect Answer
D Sectoral Internal Credit Review Correct Answer Incorrect Answer
E Statistical Inference for Credit Risk Correct Answer Incorrect Answer

Solution

Definition of significant increase in credit risk and definition of default: Significant Increase in Credit Risk (SICR) For the purpose of determining SICR, RBI has proposed that: • SICR should be assessed at the level of each counterparty which is holding an instrument (under Ind AS 109, the SICR assessment is at an instrument level) • Following exposures/counterparties would be considered to havea SICR: •Stressed exposures classified under a ‘watch-list’ or equivalent classification for stressed exposures •Financial assets, the contractual payments on which are 30 days past due (this is a rebuttable presumption) •Counterparties that are overdue for more than 60 days.

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