Page 89 - UBF AR 2018 - E Version

NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 March 2018

33.10 Credit–related commitment risks

Such commitment risks are mitigated by regular review of unfunded limits and exposures similar to review of funded
limits and exposures.

33.11 Collateral and other credit enhancements:

The amount and type of collateral required depends on an assessment of the credit risk of the counterparty.

Guidelines are in place covering the acceptability and valuation of each type of collateral.

The main types of collateral obtained are as follows:
- For securities lending and reverse repurchase transactions, cash or securities
-For commercial lending, charges over real estate properties, inventory and trade receivables etc
-For retail lending, mortgages over residential properties etc
- Management monitors the market value of collateral, and will request additional collateral in accordance with the
underlying agreement.
-It is the company’s policy to dispose of repossessed properties in an orderly fashion. The proceeds are used to reduce
or repay the outstanding claim. In general, the company does not occupy repossessed properties for business use.
-The company also makes use of netting agreements with borrowers with whom a significant volume of transactions
are undertaken.

Although on the balance sheet netting arrangements may significantly reduce credit risk, it should be noted that:
- Credit risk is eliminated only to the extent that amounts due to the same borrower will be settled after the assets
are realized
- The documentation are legally enforceable

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