3. Remedial management
Strategies to recover loans that are classified are made
based on a case-by-case analysis.
Actions are taken according to the severity of the
classification. Nonetheless, the GCPPM
gives some guidelines of objectives to achieve according to the
classification:
Class IA:
É Reduction of total exposure.
É Improvement of security margin by incremental
collateral.
É Review of the loan documents to ensure
enforceability.
Class II:
É Prepayment of some of the obligations.
É Request for client to find alternative bankers.
É Legal action.
Class III:
É Legal action to enable the bank to exercise its rights
under the security arrangements
É Appointment of a liquidator
Class IV:
É Legal action to enable the bank to exercise its rights
under the security arrangements
É Appointment of a liquidator
35 MBA in Banking and Finance
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