16. Paragraph 53 is replaced by the following: ’53. If however the diminished financial obligation …

Paragraph 53 is replaced by the following:

’53. If however the diminished financial obligation is below the specified threshold, and in particular when the net present value of expected cash flows based on the forbearance measure arrangement is higher than the net present value of expected cash flows before the changes in terms and conditions, institutions should assess such exposures for other possible indications of unlikeliness to pay. Where the institution has reasonable doubts with regard to the likeliness of repayment in full of the credit obligation according to the new arrangement in a timely manner, the obligor should be considered defaulted. The indicators that may suggest unlikeliness to pay include the following:

• (a) a large lumpsum payment envisaged at the end of the repayment schedule;
• (b) an irregular repayment schedule where significantly lower payments are envisaged at the beginning of the repayment schedule;
• (c) a significant grace period at the beginning of the repayment schedule;
• (d) the exposures to the obligor have been subject to a forbearance measure more than once.’

1. Overview

1.1 References

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

3. Related Standards

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