Under which regulatory staging classification do credit-impaired financial assets fall, and what type of Expected Credit Loss (EC

Credit-impaired financial assets and Non-Performing Assets (NPAs) are categorized under Stage 3. This classification strictly mandates the maintenance of a lifetime ECL provision rather than a short-term 12-month window. The ECL Staging Framework : The 3-Stage approach used to classify assets from the day they are originated:

• Stage 1 : Assets that haven't experienced a Significant Increase in Credit Risk (SICR) since initial recognition, or have low credit risk. These require a 12-month ECL provision.
• Stage 2 : Assets that have experienced an SICR since initial recognition. These require a Lifetime ECL provision.
• Stage 3 : Credit-impaired / Non-Performing Assets (NPAs). These require a Lifetime ECL provision .

Credit-impaired financial asset is a loan or investment where it has become obvious that the bank will not get all of its money back, or won't get it back on time. This happens because something major went wrong with the borrower (like missing multiple payments, filing for bankruptcy, or suffering severe financial distress), which severely damages the chances of the lender recovering the full amount owed.