3.1

LFIs must implement an adequate, well-documented and effective Credit Risk management framework consisting of policies, processes and controls that comprehensively cover the acquisition and management of Credit Risk. This framework must be consistent with the Board-approved Risk Appetite of the LFI and the Risk Profile, systemic importance and capital strength of the LFI.
 

3.2

The framework must cover all the key steps of the Credit Risk lifecycle, including, but not limited to, origination, underwriting, approval, monitoring, portfolio management, recovery and provisioning.
 

3.3

The Credit Risk management framework must include a robust methodology for the early identification and appropriate measurement of credit losses that meets the minimum requirements as set out in the accompanying standards to this regulation.
 

3.4

The Credit Risk management framework must ensure the effective data aggregation, identification, measurement, monitoring, reporting, control and mitigation of Credit Risk.
 

3.5

The framework must ensure that significant sources of concentration risk and exposures with low levels of credit-worthiness are specifically addressed, and that proper risk management and risk mitigating processes are in place.
 

3.6

The framework must be supported by documented policies and procedures and clearly defined roles and responsibilities.
 

3.7

The Credit Risk framework must ensure an effective credit administration process supported by comprehensive and robust information systems for the accurate and timely identification, aggregation and reporting of Credit Risk exposures to the Board and Senior Management on a regular basis is in place.
 

3.8

The framework must also ensure that the LFI implements policies to identify, manage and report on exceptions to policies governing Credit Risk management. Such policies must specify the process to grant exceptions and ensure the involvement of Senior Management or the Board when necessary.
 

3.9

The framework must also be designed to identify and monitor the risk factors that could lead to a deterioration in creditworthiness or Default of their Obligors.