Implications of Using SBECL

The following are the implications of using a Scenario-based ECL Computation method:

• Scenario-based ECL Computation is applicable only for Forward Exposure and Specific Provision methodologies.
• For Cash Flow, Roll Rate, and Provision Matrix methodologies, ECL for different Scenarios are the same.
• PD Model only generates a weighted average PDs. This may not be used for Scenario-based ECL Computations.
• ECL Reconciliation cannot be performed on ECL runs, which are Scenario-based.
• Performance for ECL is impacted.