Guidelines on Management of Problem Loans

Scope of EWS Process The EWS process is organized in three stages: identification, action, and monitoring. Each of these stages is described in detail in the following sections. The timeline for implementing actions included in each of these stages is explained in section 2.3 . # Area Description 1 Signal Identification • Responsibility for establishing parameters for signals and monitoring resides in a separate unit or function within risk management, middle or back office. • Upon identification of a signal, notification is sent to the respective relationship manager and his team leader that action is required to close the EWS breach. 2 Action • Relationship Manager contacts the borrower and identifies the source and magnitude of a potential payment difficulty. • After analysis and in consultation with risk management, a corrective action plan is put in place. • A loan is added to the watch list prepared on the basis of EWS for the purposes of further monitoring. 3 Monitoring • Risk management approval required to remove the loan from watch list prepared on the basis of EWS. • A loan can remain on watch list for a time period specified by the bank. After that period, loan must be either returned to originating unit or transferred to Workout Unit. • While on the watch list, a loan should be classified with a lower risk rating compared to the one prior to moving to the watch list.