This paper is being issued by the Basel Committee on Banking Supervision to address how common data and processes related to loans may be used for assessing credit risk, accounting for loan impairment and determining regulatory capital requirements. The guidance supersedes Sound practices for loan accounting and disclosure, published by the Committee in July 1999, and is structured around ten principles that fall within two broad categories:
- Supervisory expectations concerning sound credit risk assessment and valuation for loans
- Supervisory evaluation of credit risk assessment for loans, controls and capital adequacy
