parti: objectives and features of the new reporting system 159 - TARA

4 See "Note on Method of Territorial Segregation of Items in Bank Balance
Sheets", Appendix No 11 to Majority Report of Commission of Inquiry into
Banking, Currency and Credit, 1938' Reports, The Stationery Office, P 460
5 See Balance of Payments Manual, International Monetary Fund, 4th Edition,
1977
6 A non-resident office is defined as a non-resident branch or wholly-owned
banking subsidiary of the reporting bank and, in the case of the Associated
Banks, their non-resident head office.
7 The format is similar to (but in somewhat greater detail than) Table C3, "All
Licensed Banks: Aggregate Balance Sheet", Central Bank of Ireland, Quaterly
Bulletin, Winter 1983(4), Statistical Appendix
8 See Balance of Payments Manual, op. cit, Ch. 3.
9 See Balance of Payments Manual, op. cit., Chs 18 and 19.
10. In the past, the inclusion of unearned interest and charges in credit subject to
the guideline presented difficulties for banks engaged in instalment lending
When high interest rates prevailed, a large amount of these banks' permitted
extension of credit was absorbed by unearned interest on any new loans
extended Moreover, when interest rates had increased significantly over, say,
the previous couple of years, an additional problem was created for these
banks During such a period the amount of unearned interest applicable to new
loans could be significantlv in excess of the amount of unearned interest
applicable to the loans being replaced In implementing credit guidelines it
became necessarv to make an adjustment to take account of any increase/
decrease in unearned interest and charges Howevei, the adoption of the new
accounting procedui'es in the new monthly bank return for recording instalment
credit has eliminated this problem
11. In the case of banks which delay writing-off bad debts the measurement of
credit on a gross basis would mean that recorded credit would continue to -
i eflect not only debts which other banks would have written-off but would also
reflect ini erest debited to such loan accounts: under a credit guideline system,
this would have the effect of using up such banks' credit limits. However, the
measurement of credit on a net basis would allow banks there and then to
extend additional credit equivalent to the increased provisions Provisions
would be made not only in lespect of loan repayments in aireais but also in
lespect of that poition of loans, consideied to be bad and doubtful, foi which
i epayments would be due in the futui e Accoi dingly, undei a guideline system,
the net basis would be moie likely to pennit banks to extend additional loans
somewhat in line with what they would have been able to do if the loans had
been lepaid on schedule the gross basis would cuib banks' ability in this
•egaid until bad debts weie wntten-off
182