Changes To Credit Manual

JTB Credit Policies & Procedures
Edited by Paragon Business Improvement

Version 2.0 | January 2016
In essence, JTB must strictly monitor the purpose of the facilities granted to its customers48 as guided by the below
policy directives:
a) For Active accounts, it is mandatory that JTB personnel who are in direct contact with a given client (the
Branch Manager and/or Credit Officer) conduct an unannounced site visit to the client’s project premises (or
an announced visit to the client’s working premises where no project is being financed) twice a year. Further,
any designated JTB member who is not in direct contact with the client’s file must also conduct a site visit
once a year. The frequency of visits must increase for accounts that are classified as Special Mention or
below.
b) JTB is to reconsider the adequacy of approved facilities at least once a year and as needed, in order to
ascertain that the facilities granted to each customer are properly used, in conformity with available data on
the customer’s financial situation and volume of activities. This matter rests with the Credit Committee. The
CRR Manager must ensure that such reconsideration takes place upon every file renewal.
c) Whenever examining a real estate credit file, JTB is to verify on its own responsibility the purpose of the
credit and the repayment sources. This matter rests with the Corporate & SMEs Banking Department. The
CAD Manager must prompt the CBD Manager to ensure the strict compliance of the RM team with this
requirement.
d) Whenever financing a construction project, JTB is to verify the validity of the sale contract concluded
between the owner and the purchaser, monitor the project’s cash flows, and make sure that the purchaser is
paying the installments according to the agreed schedule. Once again, this matter rests with the Corporate &
SMEs Banking Department alongside the Credit Risk & Review Department. The CAD Manager is to prompt
both Department Managers to strictly comply with this BDL requirement.
e) JTB is to strictly adhere to the contents of the credit file as specified in BCC Circular 238, as this facilitates the
monitoring process and prevents any late detection of delinquency signals. The CAD Manager is the custodian
of such file, and must trigger all related parties (the branch, Relationship Managers or the Monitoring and
Control Unit) to provide the necessary information to ensure file completion at any moment in time.
At JTB, when a file defaults, the monitoring officers bear a portion of the responsibility. This is so because
adherence to an early warning signal philosophy should, in most cases, avoid the deterioration of a given situation
from delinquency to outright default. Such responsibility is also to be shared with the Credit Officers at the Branch
who are supposed to be the first point of contact with clients. All said, a diligent early problem recognition process
should be adhered to, as downgrading customer classifications jeopardizes the Bank's capital and depositors’
funds, and Credit Officers, whether at the Administration Department or at the Branch, should do their utmost
best to avoid any downgrade situation. For this reason, The CRR Manager should receive the following reports
issued by the Monitoring & Control Officer before their dispatch to Mr. Chairman & The Credit Committee, and
should present possible solutions to the Committee or Mr. Chairman within the stated delays below:
Report Issued by CRR Manager to Study critical

clients and recommend to
Mr. Chairman and Credit
Committee within a max. of:
Monthly Over-Limits & Accidental Debtors Report 10th of the month 5 days
Monthly Client Listing of Overdue Discounted Bills & 15th of the month 5 days
Acceptances Report
Annual Credit Performance Report (24Branches) Mid-Dec. Dec. 24
48
As stressed in various BDL Circulars and clearly stated in Article 161 of the Code of Money and Credit.
Edited by Paragon Business Improvement | Version 2.0 | Feb 2016 | www.paragon-bi.com Page 104
SOP 42 Monthly Monitoring of Term Loan Limits
Type: Guiding Procedure

Context: Term Loans are yet to be programmed on both the new and existing core banking software. Once
they are, this 4‐step procedure will become obsolete.
1. Credit Administration Officers maintain a manual (Excel) table for each Term Loan granted at JTB.
2. On a monthly basis, Credit Administration Officers extract data on actual settlement from the core banking
system and drop the limit manually on their Excel files.
3. The Credit Monitoring & Control Officer double-checks all entries made by the various Credit Admin Officers,
client by client, and provides an approval to drop / change the actual limit manually on the core banking
system.
4. The Credit Monitoring & Control Officer extracts a list of clients in default and shares it with Mr. Chairman with
a copy to the CRR Manager.
5. Where a client is found to be in default with one or more outstanding bills, SOP 59 - Managing Over-due
Accounts enters into effect.
Inputs Outputs Executors Collaborators

Core banking data on Updated limits CAD Officers Credit Monitoring &
customer’s settlement Control Officer
activity
SOP 43 Monthly Monitoring of Kafalat Loan Balances

Context: Kafalat loans are programmed on both the new and existing core banking software. Yet, monthly
monitoring of balances continues as per this policy.
1. The Credit Monitoring & Control Officer maintains a log of Kafalat loan schedules for every client benefitting
from the Kafalat program.
2. S/he extracts the customer position on a monthly basis from the core banking system for every client
benefitting from the Kafalat program.
3. S/he cross-checks the entries on the customer position with the required Kafalat loan balance in order to
monitor for any over-dues.
4. Where a client is found to be in default with one or more outstanding bills, SOP 59SOP 60 - Managing Over-Due
Kafalat Bills enters into effect.
5. The Officer updates the listings under preparation for all Kafalat-related reports (see the policy under the
Reporting chapter below); namely:
 Kafalat & Subsidized Loans Report (weekly)
 Kafalat Balances Report (weekly)
 Unsettled Kafalat Bills Report (monthly) –copy to be shared with the CRR Manager
 Subsidized Loans Report (quarterly).
Core banking data on Updated Kafalat reports Credit Monitoring &
customer position Control Officer
SOP 44 Monitoring Over-due Bills

Context:
 This procedure concerns the “Monitoring” function only. Actions to be taken based on the monitoring of
over‐due bills are detailed in the procedures of Chapter 15.0 - M ANAGEMENT OF THE P ROBLEM L OAN . .

1. Based on data extracted from the core banking system, the Credit Monitoring & Control Officer produces the
report of all unsettled commercial bills.
2. Over the first 10 days of the month, the Monitoring & Control Unit contacts the relevant branches through
follow-up e-mails and letters to alert the listed clients and request prompt payment.
3. Based on the results obtained until the 10th of the month, the Credit Monitoring & Control Officer produces the
following The Unsettled Bills Report which includes:
 Statistics on all overdue bills for Retail and Commercial combined
 The listing of all commercial clients categorized as Active, Special and Special Mention, whose records show
unsettled bills, along with an update of branch contact results.
4. The Monitoring & Control Unit sends the Statistics portion of the above report to Mr. Chairman and the Client
Listing portion to the Credit Risk & Review Manager.
5. Over the span of 5 days, the Credit Risk & Review Manager shall attempt to contact and selected clients
together with the CBD Manager, and undertake preventive treatment procedures. All results are to be
forwarded as recommendations to Mr. Chairman and the Credit Committee.
6. The outcome of Mr. Chairman’s decision and/or of the Credit Committee’s deliberations is to be communicated
by the CAD Manager to all Junior Credit Committee members.
7. Following no progress at the end of a 30-day period, the procedures under Chapter 15.0 - M ANAGEMENT OF THE
P ROBLEM L OAN enter into effect.

Core banking data Monitoring report Credit Monitoring & Branch Credit Officers
Control Officer Credit Risk & Review Manager
Credit Committee
Mr. Chairman
SOP 49 Monitoring & Reporting on the Ceilings of Credit Limits and the Single Economic Group

Context: BCC Circular 276 and BDL Circular 311 on the monitoring of the Single Economic Group form the
basis for the below procedure. The below is conducted on a monthly instead of quarterly basis as required by
supervisory authorities.

1. The Reporting Officer at the Credit Administration Department shall obtain the latest value of Tier 1 Capital
from the Finance Department. This value forms the basis for the ensuing monitoring and reporting procedure.
2. The Reporting Officer at the Credit Administration Department extracts the customer position of clients
representing 5% of Tier 1 capital or belonging to a Single Economic Group.
3. A pre-formulated template of the report requested by BDL is used for entering all relevant data as provided in
the Appendices and attachments to BCCL Circular 276 and BDL Circular 311.
4. When filling the template, the Reporting Officer shall observe the following guidelines:
 By “facilities” is mean the higher between approved and utilized facilities. Any commercial bills issued by
the debtor or any of his/her economic group members and purchased by JTB are to be added to the total
of facilities.
 Provisions, if available, are to be deducted from the above facilities
 The weights provided in Appendix 3 of BCC Circular 276 are to be applied to all facilities (net of
provisions). These weights have already been pre-programmed in the Excel module that is available at the
Credit Administration Department for this purpose.
5. The Officer issues the following reports on the Single Economic Group:
 Form C-8 as provided in the Appendix of BCC Circular 276
 Form G-8 as provided in the Appendix of BCC Circular 276.
These forms have already been pre-programmed in the Excel module that is available at the Credit
Administration Department for this purpose.
6. The Reporting Officer shall submit the report to the CAD Manager for observation62.
7. Where the bank is in excess of any of the maximum lending limits set forth by the BDL and BCCL as calculated
through this procedure, the CAD Manager shall duly notify ALCO, and various options for balancing the excess
will have to be studied.
8. The CAD Manager shall approve of the contents prior to sending the report to the Finance Department for
submission to the BDL. A copy of the report will be shared with the CRR Manager.

Customer Adherence to limits calculations issued Reporting Officer Monitoring & Control
position data by the pre-programmed module at the Officer
CAD.
Forms C-8 and G-8 as required by the

BCCL
62
Signatures for BDL reporting purposes are as described in the Reporting Chapter of this Manual
Version 2.0 | February 2016
Procedures
SOP 53 Early Problem Detection

Context:
The Credit Risk & Review Manager proactively attempts to act on Early Warning Signals so as to avoid client
downgrading and / or resort to Remedial & Recovery Management.
1. As per the Policy section of the Credit Administration chapter, the CRR Manager should receive the following
reports issued by the Monitoring & Control Officer prior to their sharing with Mr. Chairman by the indicated
dates, and should formally request such reports if not received on time:
 Monthly Over-Limits & Accidental Debtors Report (by the 10th of the month)
 Monthly Client Listing of Overdue Discounted Bills & Acceptances Report (by the 15th of the month)
 Annual Credit Performance Report (24 Branches – to be received entirely by Mid-December).
2. The CRR Manager reads through the above lists and selects those credit files that are exhibiting one or more of
the following symptoms. The CRR Manager requests the launching of a mid-cycle review process for these files
(as per Workflow Chart 1 and the methodologies described in Chapter 8.0 - T HE C REDIT A PPROVAL P ROCESS ):
 One or more overdue bills
 Delay in the settlement of limit excesses beyond one month
 Down-grading request by the CAD
3. The CRR Manager reads through renewed files for a given month and selects those credit files that are
exhibiting one or more of the following symptoms:
 Financials indicative of an unrealistic repayment structure
 Delays in submitting financials
 Formation of hardcore overdraft
 Slow account movement
 Kiting between banks
 Willingness to pay very steep interest rates
 Frequent returns of issued checks for insufficient funds
 The existence of any previous problems surrounding the borrower
 The existence of question marks surrounding the borrower's business practice
 Management concerns (problems between partners, or managers and owners)
 Lack of transparency in financial reporting
 Excessive withdrawals or very generous dividend policy
 Indications that the life style of owners or managers is beyond their means.
 Loose management (i.e. lack of MIS and internal controls)
 Excessive dependence on key raw materials
 The existence of a few customers relative to sales (thus a high bargaining power)
 Obscure management succession
 Vulnerability to shifts in technology
 Substantial changes in accounting practices (percentage of depreciation, income recognition, etc.)
4. For selected files, the CRR Manager requests the CBD Manager to undertake a Mid-Cycle Review as per the
criteria and methodologies described in Chapter 8.0 - T HE C REDIT A PPROVAL P ROCESS .
5. The CRR Manager will classify each of the selected files as “Under Close Supervision” and will continue
monitoring it for a further month to come.
Version 2.0 | February 2016
6. The CRR Manager awaits 5 – 7 days for the results of the mid-cycle review to identify the source of the delay in
payment settlement. Where the CRR Manager does not receive the results of mid-cycle review to identify the
source of the delay in payment settlement within a period of 5 – 7 days, the CRR Manager will raise the matter
to do Credit Committee.
7. Where mid-cycle review data is compiled and analyzed at the CBD, and a CAM is received by the CRR Manager,
the CRR Manager shall consider the following and act accordingly:
 If the source of the problem is related to general economic conditions affecting the sector under
consideration, the CRR Manager will advise the CBD Manager to advise the client to consider alternatives
for settlement, of which rescheduling is one. Where rescheduling is the chosen option, the CRR Manager
will initiate the steps in Chapter 8.2 - Amendments – Workflow Charts 2 and 3 above, as applicable.
 If the source of the problem is related to the client’s own financial mismanagement, the CRR Manager will
advise the CBD Manager to request a joint client meeting in the presence of the Branch Manager in order
to:
 Warn of potential down-grading of the client’s classification, and request an immediate settlement.
 Discuss alternatives for settlement and obtain the client’s written pledge to execute the chosen
alternative.
8. The final outcome of the review process is compiled by the CRR Manager and attached to the original reports
received from the Credit Administration Department, then forwarded to:
 Mr. Chairman
 The Credit Committee, with a request to hold a meeting for discussion for selected clients (if necessary).
9. The Chairman's and / or Committee's response would be, as usual, addressed to the Credit Admin Manager,
with the CRR Manager on copy. The CAD Manager will act according to the instructions stated by Mr. Chairman
and the Credit Committee.

Monthly Classified Accounts report Meetings with clients CRR Manager CRR Officer
Over-Limits & Accidental Debtors to revert to agreed The Branch
Report payment schedule CAD Manager
Unsettled Kafalat Bills Report Signed client pledge Monitoring & Control
Renewed files Officer

16.2 REPORTING SCHEDULES
Weekly Repots Initiated By Report Description Addressed to
Kafalat & Subsidized Reporting Officer Listing of all loans that benefit from obligatory reserve deductions Finance Department
Loans Report Reference Forms: ARO-10; ARO-02; ARO-10
Kafalat Balances Report Reporting Officer All Kafalat loan balances by type of loan (Basic, Basic-Delegation and Plus), alongside the original Deloitte & Touche
approved limits and utilized portions.
Over-Limits & Accidental Monitoring Officer Report by branch on all accounts exceeding limits either due to a temporary over-limit decision Credit Committee
Debtors Report (through password) or accidentally. Chairman & GM
Individual branches
Passwords Report Monitoring Officer Listing of all clients whose accounts are over the specified limits due to passwords, whether the Chairman & GM
excess is still within the allowable term or not. Audit Department
Credit Risk & Review
Manager
Past Due Transactions Monitoring Officer A report grouping all past due transactions for the week Credit Committee
Monthly Reports Initiated By Report Description Addressed to

Unsettled Commercial Monitoring Officer Listing of all clients categorized as Active, Special and Special Mention, whose Branches
Bills Report records show unsettled bills; Sent to each branch for follow-up with clients
Supervisory Classification Monitoring Officer Conducted monthly at JTB (instead of quarterly as required by the supervisory Junior Credit Committee
of all Credit files authorities in BDL Circulars 58 and 279)
Over-Limits & Accidental Monitoring Officer Listing of all accounts classified as Normal, Special or Special Mention and in excess - To CRR Manager (to be forwarded by
Debtors Report of specified limits whether through a password or accidentally or as a result of end- CRR Manager to Mr. Chairman &
of-month posting of interest and commissions Credit Committee with attached
recommendations after a max. of 5
days).
- To branches: to be forwarded to
Branches by CAD Manager in all
cases.
Discounted Bills Report Monitoring Officer The value of all bills and acceptances, both non-due and over-due, categorized as - To CRR Manager (to be forwarded by
per supervisory classification and with comparative tabulations against the previous CRR Manager to Mr. Chairman &
Monthly Reports Initiated By Report Description Addressed to

month Credit Committee with attached
recommendations after a max. of 5
days).
Unsettled Kafalat Bills Reporting Officer A listing of all Kafalat clients with one or more over-due bills Kafalat S.A.L.
Report
Clients with facilities in Monitoring Officer Listing of clients, their facilities, utilized portion, guarantees provided alongside Board
excess of $525,000 their Economic Sector rating, Sovereign Rating, and Loan Purpose
Overdue Annual Reviews CAD Manager A listing of all overdue annual reviews, indicating lack of action by branches Credit Committee
Documentation CAD Manager A listing of all files and their corresponding branches where documentation is Credit Committee
deficiency report deficient
Deterioration of value CAD Manager A report initiated by the CAD Manager on securities devalued since their last Credit Committee
of collateral securities appraisal
Risk Rating Changes CRR Manager Data extracted from Paragon’s CRR Module and (where data is available), the Chairman & GM
S&P Rating System, to cover: Risk Management Dept.
 Individual changes in the risk ratings of reviewed or renewed facilities Credit Committee
 Changes to the loan portfolio’s rating in terms of lending by sector,
country, currency and type of loan
 The lending portfolio’s Probability of Default in comparison to the previous
month and the YTD average, both overall and by sector
 The lending portfolio’s Expected Loss in comparison to the previous month
and the YTD average, both overall and by sector
Quarterly Reports Initiated By Report Description Addressed to

Credit Risk Limits Data Reporting Officer As per BCC Circular 276 BCC
Reference Forms: G-8 and C-8
Credit Risk Limits Report Reporting Officer As per BCC Circular 276 and BDL Circular 311 Chairman & GM
Large Debtors Report Monitoring Officer Report on the credit status of all clients whose facilities exceed 1% of Tier 1 Capital or are in excess Chairman & GM
CRR Manager of $1 million
Subsidized Loans Report Reporting Officer Statements of accounts for all clients benefitting from subsidized loans, and client position at the BCC
end of every quarter
Quarterly Reports Initiated By Report Description Addressed to

Interest on Subsidized Reporting Officer Listing of all clients benefitting from subsidized loans and total value of interest subject to BDL
Loans Report subsidies for the past quarter; Reference Form: PB-02
Facilities Against Shares CAD Manager As per BCCL Memo 13/2013 Finance Department
Held in Other Banks or Listing of all facilities granted against GDRs or Preferred Shares held in other banks or financial
Financial Institutions institutions
Guarantees Due CAD Manager All guarantees that have fallen due and require follow-up Branches
Single Economic Group Reporting Officer As per BDL Circular 48 and BCC Circular 276 on the subject of the Single Economic Group, a Chairman & GM
CRR Manager listing of all clients forming part of a Single Economic Group, along with details of their credit
status and guarantees
Economic Classification Monitoring Officer Classification of clients by economic sector and by size of enterprise (SME or Corporate) BDL
of Clients Reference Form: R-01
Dormant Accounts Monitoring Officer Listing of all accounts that have been dormant for over 3 months Credit Committee
Related Party CAD Manager A report initiated by the CAD Manager or all Related Party transactions over the past quarter Credit Committee
Transactions
Delinquent Subsidized Monitoring Officer All subsidized or incentive loans that are over 90 days overdue (as per BCC Circular 278); Reference BCC
Loans Form: 4SL
Quarterly Progress CBD Manager Progress monitoring report for the Corporate & SMEs Credit Portfolio, detailed by branch, sector, Chairman & GM
Report country and loan category Credit Committee
ALCO
Annual Reports Initiated By Report Description Addressed to

Credit Performance Report Monitoring Officer Description of performance per individual commercial credit account, covering: Credit facilities CRR Manager (to be
provided, client classification, date of the last signed Bien Trouvé, Review file status (renewed, forwarded by CRR
due, etc.), Over-due bills, and the Credit Administration Department’s required action from the Manager to Mr.
branch for client follow-up. Chairman with attached
recommendations no
later than Dec. 24)
Annual Business Plan CBD Manager A business plan for the Corporate & SMEs Credit portfolio that serves as a benchmark for Chairman & GM
quarterly progress monitoring. Credit Committee
ALCO

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JTB Credit Policies & Procedures

Edited by Paragon Business Improvement

Report Issued by CRR Manager to Study critical

SOP 42 Monthly Monitoring of Term Loan Limits

Type: Guiding Procedure

Inputs Outputs Executors Collaborators

SOP 43 Monthly Monitoring of Kafalat Loan Balances

Type: Guiding Procedure

SOP 44 Monitoring Over-due Bills

Type: Guiding Procedure

Inputs Outputs Executors Collaborators

Type: Guiding Procedure

Inputs Outputs Executors Collaborators

Forms C-8 and G-8 as required by the

Type: Guiding Procedure

Inputs Outputs Executors Collaborators

Monthly Reports Initiated By Report Description Addressed to

Monthly Reports Initiated By Report Description Addressed to

Quarterly Reports Initiated By Report Description Addressed to

Quarterly Reports Initiated By Report Description Addressed to

Annual Reports Initiated By Report Description Addressed to

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