Provision Rate
The provision matrices are provided by the banks as input into the staging tables. These provision matrices provide the provision rate that is applicable for a particular group of accounts based on the input factors associated with that account.
In the ready-to-use product, different Provision matrices are assigned to different groups of accounts based on the following factors:
Customer Type
- Product type
The provision rates can be computed for different instrument groups based on historical data and adjusted for forward-looking factors using the Enterprise modeling framework.
Assigning Provision Rates for Corporate Accounts
The Provision Rates for Corporate accounts may be assigned using the ratings provided and the corresponding rates assigned are in percentage terms.
For example:
Table 12-1 Fields in the Provision Rates for Corporate Accounts
| Rating | Rates in % |
| AAA | 1% |
| AA | 3% |
| A | 5% |
| BBB | 10% |
| BB | 20% |
| B | 30% |
| CCC | 40% |
| CC | 50% |
| C | 60% |
| D | 100% |
Assigning Provision Rate for Retail Accounts
The Provision Rates for Retail accounts are assigned using Delinquency Past Due (DPD) bands and the rates are in percentage terms.
Table 12-2 Fields in the Provision Rates for Corporate Accounts
| Rating | Rate |
| 0-30 Days | 1% |
| 31-40 Days | 5% |
| 41-100 Days | 30 % |
The application uses Rules to determine the rates applicable for an account, based on the Stage, Product Type, and Customer Type. Rates are picked from matrices as in the examples provided.