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Erudite AfricaCenter of Excellence
← Interest Free Banking Financing: Advanced

Risk grading and exposure limits

Module 02 / 7 · 55 min

Grade customers and connected groups on a consistent grid, spot a significant increase in credit risk, and test every request against large and related-party exposure limits.

In this module you will learn to

  • State the purpose, scope, parameters and review period of customer risk grading, including grading for linked lending
  • Apply the presumption of a significant increase in credit risk once a payment is more than 30 days past due
  • Identify single counterparties, groups of connected counterparties, related parties and influential shareholders
  • Test a new request against large exposure and related-party limits measured on total capital

Built on

  • Erudite Africa training outline: Interest Free Banking Financing, Level 3 Advanced (October 2026)
  • A typical Ethiopian bank's IFB financing business procedure (May 2025), unnamed: approval system, grading, follow-up, problem finance, write-off, portfolio management and exceptions
  • NBE Bank Corporate Governance Directive No. SBB/91/2024 (influential shareholder at 2%) and Risk Based Capital Adequacy Requirement for Banks Directive No. SBB/95/2025, issued under Banking Business Proclamation No. 1360/2025
  • NBE directives on interest free banking, large exposures, related parties, and asset classification and provisioning, in their current versions
  • AAOIFI Sharia'h Standards, including Sharia'h Standard No. 8 (Murabaha); the host bank's Sharia'h Advisory Committee rulings take precedence
  • IFRS 9 Financial Instruments: expected credit loss staging

Examples and companies are fictional. Bank practices are shown as typical Ethiopian practice, not as any one bank's policy. Always apply your own institution's approved policy and the current NBE directives.