Provisioning & Central Bank Loan Classification Norms Agent AI

INVOKED WHEN: month-end batch runs or CBS flags an account crossing a DPD threshold requiring classification review

• –Reads the CBS DPD position for every active loan and applies the Central Bank Loan Classification Norms classification rules: accounts at 90 DPD or more are classified Sub-Standard; accounts that have remained Sub-Standard for 12 months are classified Doubtful; accounts that have remained Doubtful for prescribed periods or where the recovery prospect is remote are classified Loss. Each classification is based on the DPD count alone — the Central Bank Loan Classification Norms rules are mechanical, not judgment-based.
• –Checks for upgrade eligibility: an account that was classified as NPL but has since regularised (all overdue amounts paid, account performing for at least the prescribed regularisation period under Central Bank Loan Classification Norms) is eligible for upgrade back to Standard. The agent identifies upgrade-eligible accounts and flags them for the authorised official's review — upgrading an NPL account is an equally regulated act as classifying one.
• –Produces the classification schedule — every account's current classification, the DPD basis for classification, and the change from the prior period's classification (new NPL, upgrade, no change). The schedule is the authorised official's review document before sign-off.

INVOKED WHEN: NPL classification schedule is finalised and provisioning requirements need to be computed

• –Computes expected credit loss provisions under IFRS 9 for each classified account — reflecting Stage 1, Stage 2, and Stage 3 ECL requirements and CBUAE / SAMA asset classification rules. Central Bank Loan Classification Norms set classification triggers and supervisory reporting categories; provisioning follows the institution's IFRS 9 ECL methodology rather than a fixed 15%/25%/40% rate schedule. The agent does not apply judgment beyond the approved IFRS 9 ECL model and institution policy.
• –For secured accounts, reads the current security valuation from the security valuation store and computes the net unsecured exposure (outstanding balance minus current security value) — because the Central Bank Loan Classification Norms provisioning rate applies to the unsecured portion, and the provisioning requirement for a secured NPL with adequate collateral is materially lower than for an unsecured one.
• –Computes the aggregate provisioning requirement and compares it to the current provisioning balance on the general ledger — identifying the provision shortfall or surplus. Where the required provision exceeds the current provision, flags the shortfall for the CFO to authorise a GL provisioning entry.

INVOKED WHEN: quarterly board compliance reporting cycle or CBUAE / SAMA regulatory submission is due

• –Produces the formal Central Bank Loan Classification Norms compliance report: NPL ratios (Gross NPL, Net NPL) by portfolio segment and product, movement in NPL during the period (fresh NPLs, upgrades, write-offs, recoveries), provisioning coverage ratio, and a compliance note confirming that classification and provisioning have been applied in accordance with the CBUAE / SAMA credit classification circulars.
• –Tracks changes in CBUAE / SAMA credit classification circulars through the regulatory corpus — if CBUAE / SAMA amends classification or provisioning requirements, the agent flags the change and updates the computation methodology before the next month-end run. Central Bank Loan Classification Norms compliance is only as current as the regulatory corpus.