APRA Prudential Standard APS 220 Credit Quality
This Prudential Standard requires an authorised deposit-taking institution (ADI) to control credit risk by adopting prudent credit risk management policies and
procedures. These policies and procedures must apply, in particular, to the recognition, measurement and reporting of, and provisioning for, impaired
The key requirements of this Prudential Standard are that an ADI must:
• have an effective credit risk management system that is appropriate to its needs;
• regularly review its credit risk management system, taking account of changing operating circumstances, activities and risks;
• have a robust system for the prompt identification, monitoring, and accurate and complete measurement of its credit risk. This includes recognition and reporting of impaired facilities and estimated future losses on the credit portfolio; and
• maintain provisions and reserves adequate to absorb existing and estimated future credit losses in its business given the facts and circumstances applicable at the time. This includes maintaining a prudent level of a General Reserve for Credit Losses.
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