Introduction to OD Loans Provisioning and Asset Classification

The Temenos Transact should automatically be able to classify all bank’s newly created loans and advances and overdrafts as PASS on the start date of the loans and advances and overdrafts and should classify the overdraft accounts based on minimum debit balance registered within last 360 days .

• Asset classification should be done automatically by the system on all loans, advances and overdrafts on the date the loans and advances and overdrafts are granted to the customers. System to classify under PASS and process provisioning of 1% on start date of loans and OD.
• In addition to the others, minimum debit balance registered with in the last 360 days is one of the asset classification criteria for all overdraft facilities.
• Minimum provision percentage maintained by a bank for each loan and overdraft classified as non performing should not be less than 3% of the O/S balance (Due plus Undue).