Securities purchasedsold under resalerepurchase agreements

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.

p. Consumer financing receivables

Subsidiary’s consumer financing receivables are recognised initially at fair value, added with directly attributable transaction costs and deducted by yield enhancing income, and subsequently measured at amortised cost using the effective interest rate method. Subsidiary’s consumer financing receivables are classified as loans and receivables. Refer to Note 2c for the accounting policy of financial assets for loans and receivables. Early termination is treated as a cancellation of an existing contract and the resulting gain or loss is credited or charged to the current year’s consolidated statement of profit or loss and other comprehensive income at the transaction date. Credit restructuring can be done by transfer of financing, continue to finance, repay back, change the due date, change the tenor andor increase the down payment. Subsidiary’s unearned consumer financing income is the difference between total installments to be received from customers and the total financing which is recognised as income over the term of the contract using effective interest rate. Consumer financing receivables are stated net of joint financing receivables where joint financing providers bear credit risk in accordance with its portion without recourse, unearned consumer financing income and allowance for impairment losses. Joint financing receivables where jointly financed with other parties, bear credit risk in accordance with their financing portion without recourse and presented on a net basis in the consolidated statement of financial position. Consumer financing income and interest expense related to joint financing without recourse are also presented on a net basis in the consolidated statement of profit or loss and other comprehensive income. For joint financing without recourse, Subsidiary has the right to set higher interest rates to customers than those as stated in the joint financing agreements with joint financing providers. The difference is recognised as revenue and disclosed as “Consumer financing income”.