B Glossary

Amortized Cost

Total exposure- principal repayments.

Allowance for Loans and Lease Losses (ALLL)

The allowance for loan and lease losses, originally referred to as the reserve for bad debts, is a valuation reserve established and maintained by charges against a bank's operating income. It is an estimate of uncollected amounts used to reduce the book value of loans and leases to the amount a bank can expect to collect. The ALLL is an accounting estimate of probable but unconfirmed asset impairment that has occurred in the loan portfolio as of the financial statement date. All confirmed losses must be charged off.

ALLL Ratio

ALLL Proportion is calculated as ALLL/EOP balance – Fund based.

ALLL-NPA Coverage Ratio

This ratio is calculated as ALLL/Total NPA exposures, it shows how much of ALLL is covered by the NPA exposures.

ALLL- NCO Coverage Ratio

This ratio is calculated as ALLL/Net Charge Off, it shows how much of ALLL is covered by the Net Charge off.

Asset Classification

According to the farm credit administration, assets are classified as Acceptable, Other Assets Especially Mentioned, Substandard, Doubtful, and Loss.

EOP Balance (Total)

EOP is the balance outstanding amount due from the account/exposure As-of-Date. It can also be termed as principal outstanding or net outstanding. It is inclusive of charges and fees.

EOP Balance - Fund Based

EOP is the balance outstanding amount due from all accounts representing on-balance sheet exposures as on a given date. It can also be termed as principal outstanding or net outstanding. It is inclusive of charges and fees.

EOP Balance Non-Fund Based

EOP is the balance outstanding amount due from all accounts representing off-balance sheet exposures as on a given date. Expected Loss Expected loss is the sum of the values of all possible losses, each multiplied by the probability of that loss occurring. It can be calculated as EOP balance Total* WAPD*WALGD.

Credit Score

A credit score is a numerical expression based on a level analysis of a person's credit files, to represent the creditworthiness of an individual. A credit score is primarily based on a credit report, information typically sourced from credit rating agencies.

Watchlist Status

Status of all exposures which are classified/marked as Watchlist by the bank for reasons pertaining to the borrower's loan performance, business environment, or such other reasons.

Carrying Cost

The carrying cost of exposure is the sum of the outstanding amount, interest (accrued or otherwise), and charges, if any, associated with the exposure.

Charge Off Ratio

Charge off ratio is calculated as Net Charge off/ EOP balance – Fund based.

Credit Exposure Classification

The credit exposure classification is divided into Loan exposure, Investment exposure and derivative exposure.

Commercial Provisions

Commercial provisions represent the total provisions made between the reference date and current date for the accounts which are mapped to Wholesale.

Consumer Provisions

Consumer Provisions represent the total provisions made between the reference date and current date for the accounts which are mapped to retail.

Watchlist Exposures

EOP Balance of all exposures which are classified/marked as Watchlist by the bank for reasons pertaining to the borrower's loan performance, business environment, or such other reasons.

Doubtful Assets/Exposures

Doubtful Assets have all the weaknesses of assets classified as substandard when the weaknesses make collection or liquidation in full, based on available current information, highly questionable, or improbable. It is a class of Non-Performing Assets (NPA).

Gross Credit Exposure (GCE)

GCE is the summation of the balance outstanding, accrued interest, and the complete unutilized portion of the exposure (without any credit conversion factors). The balance outstanding is the principal outstanding of the exposure, plus any charges or fees associated with the exposure.

Gross Relationship Exposure (GRE)

This would be the aggregation of GCE, DSE, indirect exposures, and related exposures.

Indirect Exposure

This would be the value of the guarantees that are provided by a customer, to an entity that is not part of the same legal organization structure as the customer.

Legal Entity Identifier

Legal Entity Identifier is a unique identifier of an entity (both individual and artificial judicial entity). The attribute is similar to the PAN (Permanent Account Number) or a Social Security Number in the case of an individual.

Loss Given Default (LGD)

Loss Given Default is the magnitude of likely loss on the exposure and is expressed as a percentage of the exposure. Loss Given Default is facility specific as such losses are generally understood to be influenced by key transaction characteristics such as the presence of collateral and the degree of subordination.

Loss Asset

Assets classified as loss are considered uncollected and of little value. Therefore, their continuance as bankable assets is not warranted. Amounts classified as a loss should be promptly charged off. This classification does not mean that there is no recovery or salvage value, but rather that it is not practical or desirable to defer writing off these assets, even though some value may be recovered in the future.

Loan-To-Value (LTV) Ratio

The Loan-to-Value (LTV) Ratio expresses the amount of a first mortgage lien as a percentage of the total appraised value of the real property. It is the ratio of the loan to the value of security offered for the loan.

Non-Performing Assets (NPAs)

NPA is a loan or lease that is not meeting its stated principal and interest payments for a specified period. Banks usually classify as nonperforming assets any loans which are more than 90 days overdue. More generally, an asset that is not producing income. The Non-Performing Assets are further classified into substandard assets, doubtful assets, and loss assets.

NPA - Doubtful Assets

Doubtful assets have all the weaknesses of assets classified as substandard when the weaknesses make collection or liquidation in full, based on available current information, highly questionable, or improbable. It is a class of Non-Performing Assets (NPA).

NPA - Loss Asset

Assets classified as loss are considered uncollected and of little value. Therefore, their continuance as bankable assets is not warranted. Amounts classified as a loss should be promptly charged off. This classification does not mean that there is no recovery or salvage value, but rather that it is not practical or desirable to defer writing off these assets, even though some value may be recovered in the future.

NPA Ratio

NPA Ratio is calculated as Total NPA exposures/ EOP balance – Fund based.

OBIEE

Oracle Business Intelligence Enterprise Edition

PD

The Probability of Default represents the likelihood of the borrower defaulting on the loan obligations.

PD Band PD band refers to the lower and the upper range of the PD.

Security Value

Security Value is the asset that is pledged by the borrower as a security on the value of the loan.

NPA-Substandard Assets

Substandard Assets are inadequately protected by the current sound worth and paying capacity of the obligor or the collateral pledged if any. Assets so rated have well-defined weaknesses that may trouble the liquidation of the debt and present the distinct possibility that the institution will sustain some loss if deficiencies are not corrected. It is a class of Non-Performing Assets (NPA).

Weighted Average Probability of Default (WAPD)

The WAPD is to be calculated by multiplying the PD of exposure with the sum of (outstanding amount and accrued interest) and dividing the product by the sum of the (outstanding amount and accrued interest). WAPD = PD * (Sum of (outstanding amount+ accrued interest)) / (Sum of (outstanding amount + accrued interest)).

Undrawn Exposure or Undrawn Balance Commitments

The part of the Gross Credit Exposure that is approved for the borrower but is yet to be disbursed by the bank and availed/drawn by the borrower. This can comprise of both on the balance sheet/fund based and off-balance sheet/non-fund based exposures.

Balance Previous Year

The Balance of any selected measure as of the same day of the previous fiscal year.

Balance Beginning of the Year

The Closing balance of any selected measure as of the end of the previous fiscal year or the opening balance of any selected measure as of the beginning of the current fiscal year.

Balance Last Reporting Date

The balance of any selected measure as of the date of which the subject report was last generated and reported.

Book Classification

The Book Classification is divided into Banking Book or Trading Book. The Banking Book comprises of all financial instruments which are not traded actively and are to be held until maturity. The Trading Book comprises of all financial instruments that are bought and sold regularly.

Balance Sheet Classification

The Balance Sheet Classification is divided into fund based or non-fund based. The fund based facility is any credit facility which involves direct outflow of bank’s fund to the borrower, for example – Loan, cash credit, Overdraft and so on. The non-fund based facility is a credit facility where there is no involvement of direct outflow of bank’s fund to the borrower rather it is shouldered by the third party on behalf of the borrower, for example – bank guarantee, letter of credit and so on.

Watchlist Ratio

Watchlist Ratio is calculated as Watchlist exposures/Total EOP balance.

Delinquent Exposures

EOP Balance of all exposures which are classified/marked as delinquent by the bank for reasons pertaining to the borrower's loan performance, business environment, based on days past due. The delinquent exposures is divided into Delinquent - up to 30 Days Past Due, Delinquent 31-60 Days Past Due, Delinquent - more than 60 Days Past Due.

Delinquent Ratio

Delinquent ratio is calculated as Total Delinquent exposures/EOP balance – Fund based.

Provisions

Provisions is the amount that is set aside to cover the anticipated losses in the future.

Current Provisions Ratio

Current Provision Ratio is calculated as the Provisions/ EOP balance – Fund based.

Gross Charge Off

Gross Charge Off is the amount which are written off and unlikely to be collected because the borrower becomes substantially delinquent after a period of time.

Net Charge Off

Net Charge Off is the debt owed which is unlikely to be recovered. It can be calculated as Gross Charge Off – Recoveries.

Resolutions

Resolutions are the aggregate of EOP – Fund based Balances as of reference date, of all accounts which are Watchlist/Delinquent/NPA as of reference date but are not Watchlist/Delinquent/NPA or Charged off as of current date.

Year to Date

Year to date refers to the period from beginning of the year to the current (present) date.

Quarter to Date

Quarter to Date refers to the period from beginning of the quarter to the current (present) date.

Month to Date

Month to Date refers to the period from beginning of the month to the current (present) date.

12 months trailing

12 months trailing refers to the consecutive 12 month period immediately prior to the date of report, and does not necessarily represent fiscal year ending period.

Capital

Capital is the amount a bank or other financial institution has to have as required by its financial regulator.

Tier I Capital

As defined by the Basel Committee, Tier 1 Capital refers to a bank's equity capital and disclosed reserves. It is used to measure the bank's capital adequacy. Tier 1 capital primarily consists of the common stock and the retained earnings.

Tier II Capital

Tier II Capital refers to one of the components of a bank's required reserves. Tier II is designated as the second or supplementary layer of a bank's capital and is composed of items such as revaluation reserves, hybrid instruments, and subordinated term debt. It is considered less secure than Tier 1 capital—the other form of a bank's capital—because it's more difficult to liquidate.

Tier III Capital

Tier III Capital is tertiary capital, which many banks hold to support their market risk, commodities risk, and foreign currency risk, derived from trading activities. Tier III capital includes a greater variety of debt than Tier I and Tier II capital but is of a much lower quality than either of the two.

Weighted Average Loss Given default (WALGD)

The WALGD is to be calculated by multiplying the LGD of exposure with the sum of (outstanding amount and accrued interest) and dividing the product by the sum of the (outstanding amount and accrued interest). WALGD = LGD * (Sum of (outstanding amount+ accrued interest)) / (Sum of (outstanding amount + accrued interest)).

Days Past Due

Days Past Due are the days after the due date and is application when the payment is not made by the party to the bank. This indicates by how many days a payment is overdue.

Overdue

Overdue refers to the amount which was due for payment but not paid yet.

Utilization %

Utilization % can be calculated as GCE/EOP balance - Total

Recoveries from Written Off Accounts

Recoveries from written Off Accounts is a payment received for a debt that was written off and considered uncollectible.

Credit Status

Based on the account status the Credit Status categorizes the status as impaired, delinquent, deleted, Written Off or current.

Exposure at Default

Exposure at Default (EAD) is the predicted amount of loss a bank may be exposed to when a debtor defaults on a loan.

Credit Migration Ratio

This ratio is calculated as Number of obligors downgraded/no of obligors upgraded.

Exposure Weighted Migration Ratio

This ratio is calculated as Exposure to obligors downgraded/Exposure to obligors upgraded.

Upgrade Ratio – No. of Obligors

This ratio is calculated as No of obligors upgraded/total number of obligors (opening).

Downgrade Ratio – No. of Obligors

This ratio is calculated as No of obligors downgraded/total number of obligors (opening).