SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2016 and for the year then ended Expressed in millions of Rupiah, unless otherwise stated
56
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued o. Loans and sharia receivablesfinancing continued
Murabahah receivables are the financing of goods by confirming purchase price to a buyer and the buyer pays it with a higher price as an agreed profit. Murabahah are the transaction of sales of
goods by stating the cost and income margin that has been agreed by the seller and buyer. Murabahah financing is classified as financial assets under loans and receivables according to
SFAS No. 55 “Financial Instruments: Recognition and Measurements”. Murabahah receivables initially are stated at fair value added transaction costdirectly attributable
administration fee and additional acquisition cost to acquire those financial assets and after initial recognition are measured at amortised cost using the effective interest rate method less the
allowance for impairment losses. Murabahah receivables are stated at the balance of the receivable less deferred margin and
allowance for possible losses. The Bank calculates the allowance for impairment loss according to the murabahah financing quality according to each of financing balance.
Istishna receivables are the financing of goods in the form of manufacturing the ordered goods with the agreed criteria and specification by both of orderer or buyer Mustashni and manufacturer or
seller Shani. Istishna receivables are presented based on the outstanding billings less allowance for possible losses.
Qardh receivables are a borrowing at the condition that the borrower should repay the loan at specified period of time. The Subsidiary will obtain a fee ujrah from this transaction, which is
recognised upon receipt. Qardh receivables included Hawalah and Rahn financing agreement. Hawalah is transfer of debts from debtors to other party Subsidiary which obligate to be borne or
paid.
Rahn represents the pledge of goods or assets owned by the customer to the Subsidiary for an equivalent amount of money. Assets or goods pledged are appraised based on market value, less a
certain deduction percentage. The Subsidiary will obtain a fee ujrah, which is recognised upon receipt. Qardh receivables are stated at its outstanding balance less allowance for possible losses.
Loans and sharia receivablesfinancing are classified as financial assets in loans and receivables. Refer to Note 2c for the accounting policy of financial assets for loans and receivables.
Loan restructuring Loan restructuring may involve a modification of the terms of the loans, conversion of loans into
equity or other financial instruments andor a combination of both. Losses on loan restructurings due to modification the terms of the loans are recognised as part of
allowance for impairment losses only if the present value of total future cash receipts specified by the new terms of the loans including receipts designated as interest and loan principal, are less than
the carrying amount of loans before restructuring.
For loan restructurings which involve a conversion of loans into sharestock or other financial instruments, a loss on loan restructuring is recognised as part of allowance for impairment losses if
the fair value of the equity or financial instruments received, deducted by estimated expenses to sell the equity or other financial instruments, is less than the carrying amount of loans.
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2016 and for the year then ended Expressed in millions of Rupiah, unless otherwise stated
57
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued o. Loans and sharia receivablesfinancing continued
Loan restructuring continued In 2016, the Bank formed internal regulation regarding the debtors that are eligible to be removed
from the list of restructured loans, i.e. when the loandebtor has met the following criterias: i.
Credit quality has been categorized Current Collectibility 1 according to the review results by three 3 pillars of based on credit quality of Bank Indonesia;
ii. The interest rate charged on the current loan facility is the commercial interest rates to debtors
in accordance with the relevant credit segments above the base lending rate; iii.
There are no Deferred Delinquency Interest TBYD and Deferred Interest BYDT which were not yet collected.
The internal provisions are applied since January 1, 2016.