MORNBFI Vol. 1 - Planters Development Bank

APP. Q-2008.12.31after 15 November 2008 shall take effectonly from the date when the reclassificationis made.(e) The financial asset reclassified inaccordance with Items "(b)", "(c)" or "(d)"above shall thereafter be treated inaccordance with the guidelines providedin Appendix 20: Provided, however, Thatif an FI subsequently increases itsestimates of future cash receipts as a resultof increased recoverability of those cashreceipts, the effect of that increase shall berecognized as an adjustment to theeffective interest rate from the date of thechange in estimate rather than as anadjustment to the carrying amount of theasset at the date of the change in estimate.(f) FIs that shall reclassify based on theprovision of this Annex shall comply withthe disclosure requirements under theAmendments to IAS 39 and IFRS 7 inpreparing their audited financial statements.(2) Financial assets that arereclassified from HFT/AFS to HTM/UDSCL shall thereafter be treated inaccordance with the guidelines providedunder Appendix 33;(3) Reclassification from the AFS to theHTM category shall only be allowed ifthere was a change in intention forholding the debt instrument, and thefinancial institution has the ability to holdit until maturity; and(4) FIs may reclassify from HFT/AFS toAFS/HTM/UDSCL effective 01 July 2008:Provided, That any reclassification madein periods beginning on or after15 November 2008 shall take effect fromthe date when the reclassification is made.Sec. II. Alternative accounting treatmentfor prudential reporting purposes. Thefollowing may be adopted for purposes ofprudential reports:(1) A financial asset booked under AFSmay be reclassified from AFS to HTM/UDSCL if the FI has the intention and abilityto hold the financial assets for theforeseeable future or until the maturityusing the fair value carrying amount ofthe financial assets as of the effective dateof reclassification.For this purpose, FIs may reclassifysaid financial assets from AFS to HTM/UDSCL as of any day from 01 July 2008to 14 November 2008. Thereafter, FIs shallnot be allowed to retrospectively reclassifyAFS to HTM/UDSCL. Any reclassificationon or after 15 November 2008 shall takeeffect only from the date when therreclassification is made.(2) Financial assets that are bookedunder AFS category because of the taintingof the HTM portfolio may be reclassifiedto HTM or UDSCL using the fair valuecarrying amount of the financial assets asof the effective date of reclassification.For this purpose, FIs may reclassifysaid financial assets from AFS to HTM/UDSCL as of any day from 01 July 2008to 14 November 2008.(3) Hybrid financial assets (other thanCLNs) may be included among thefinancial assets that may be reclassified outof the HFT and into the AFS/HTM/UDSCLin accordance with Items "(1)(b)" and"(1)(c)" in Sec. I by, first, bifurcating theembedded derivative from the hostinstrument and booking the derivativesunder Derivatives with Positive/NegativeFair Value; and second, reclassifying thehost contract to AFS/HTM/UDSCL.(4) CLNs and other similar instrumentsthat are linked to ROPs, on the other hand,may be included among the financial assetsthat may be reclassified (i) out of the HFTinto AFS/HTM/UDSCL in accordance withItems "(1)(b)" and "(1)(c)"; or (ii) from AFSto UDSCL or HTM in accordance with Item"(1)(d)" all in Sec. I and Item "1" above,without bifurcating the embeddedderivatives from the host instrument:Provided, That this shall only apply forCLNs that are outstanding as of the effectiveQ RegulationsAppendix Q-20 - Page 10Manual of Regulations for Non-Bank Financial Institutions