Bank Islam Integrated Annual Report 2020

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.1 Basis of preparation (continued) (a) Statement of compliance (continued) (ii) Definition of defaulted exposures under the policy documents on Capital Adequacy Framework for Islamic Banks for which assistance is granted: • • The determination of “days past due” is based on the new repayment terms of rescheduled and restructured financing. • • Individuals or SMEs are not considered to be in default based on the “unlikeliness to repay” at the time of when the assistance was granted, except for when customers are subject to bankruptcy action. • • Corporates “unlikeliness to repay” are based on holistic assessment of all relevant factors and information, not on the act of accepting assistance from the Bank. The regulatory capital treatment above shall apply to financing denominated in Malaysian Ringgit that meet the following criteria; • • The principal or profit or both, is not in arrears exceeding 90 days at the application date of assistance. • • The application is received on or before 30 June 2021. (iii) Classification in the Central Credit Reference Information System (“CCRIS”) The following shall apply for rescheduled and restructured financing with arrears not exceeding 90 days at the application date of assistance received on or before 30 June 2021: • • The financing need not be reported as (R&R) in CCRIS; and • • The financing need not be reported as credit-impaired in CCRIS However, financing with multiple R&R (more than one R&R are made from 1 April 2020 until 30 June 2021) is excluded from the above treatment as it is deemed as non-viable financing. (iv) Bank Negara Malaysia (“BNM”) allows financial institutions to drawdown certain prudential buffers as below: • • Drawdown the capital conservation buffer of 2.5%; • • Operate below the minimum Liquidity Coverage Ratio (“LCR”) of 100%; • • Reduce the regulatory reserves held against expected credit losses to 0%; and • • Minimum Net Stable Funding Ratio (“NSFR”) is lowered to 80% from 100% effective 1 July 2020. BNM requires financial institutions to restore the minimum regulatory requirements by 30 September 2021. Other than as described above, the adoption of other accounting standards, interpretations and amendments did not have any significant impact on the Group and the Bank. The following are accounting standards, amendments and interpretations of the MFRS framework that have been issued by the Malaysian Accounting Standards Board (“MASB”) but have not been adopted by the Group and the Bank. Notes to the financial statements for the financial year ended 31 December 2020 200 Financ ial Statement s Accountabi l i t y Addi t ional Informat ion