securitized loans are off balance sheet items for credit risk assessment.
securitized loans are off balance sheet items for credit risk assessment.
off balance sheet items for credit risk assessment?
securitized loans
traditionally, banks lend to borrowers under tight lending standards, keep loans on their balance sheets and retain credit risk—the risk that borrowers will default (be unable to repay interest and principal as specified in the loan contract). in contrast, securitization enables banks to remove loans from balance sheets and transfer the credit risk associated with those loans. therefore, two types of items are of interest: on-balance sheet and off-balance sheet. the former is represented by traditional loans, since banks indicate loans on the asset side of their balance sheets. however, securitized loans are represented off the balance sheet, because securitization involves selling the loans to a third party (the loan originator and the borrower being the first two parties). banks disclose details of securitized assets only in notes to their financial statements.
off-balance-sheet
risk weighted assets - fund based : risk weighted assets mean fund based assets such as cash, loans, investments and other assets. degrees of credit risk expressed as percentage weights have been assigned by the national regulator to each such assets.









































non-funded (off-balance sheet) items : the credit risk exposure attached to off-balance sheet items has to be first calculated by multiplying the face amount of each of the off-balance sheet items by the credit conversion factor. this will then have to be again multiplied by the relevant weightage.
capital adequacy ratio