7.1.3.6 Run-off

Incremental Cash Flow Run-off is applied to the End of Period (EOP) balances, indicating the amount that is withdrawn before their scheduled maturity. The computation methodology has one additional step; if cash flows exist for the dimension combination for which Run-off is specified, they are deleted, and then the new cash outflows are generated.

See the Defining a New Business Assumption, section for information on the steps involved in specifying this assumption.

The following steps are involved in applying the delay in cash flow timing assumption to cash flows:

1. Identify the original time bucket and calculate the cash outflow occurring in it due to the assumption.
2. Identify the corresponding revised time buckets and the cash inflow occurring in it, including penalties, if any.
3. If time-specific or critical obligation, record the delay and indicate a breach.

   For instance, incremental cash flow Run-off is applied to Time Deposits whose EOP balance is $ 10000. The assumption is applied on the original balance to selected time buckets as follows:

   Table 7-25 Incremental Cash Flow – Run-Off

   Business Assumption Definition			Cash Flow Assignment
   Product Type	To Bucket	Run-off	Contractual Cash Flow	Time Bucket	Revised Cash Flow
   Time Deposits	1-7 Days	10%	5000	1-7 Days	1000 [=5000 – 5000 +10000*10%]
   	8-15 Days	20%	8000	8-15 Days	2000 [=8000 – 8000 +10000*20%]