A Blue Chip company was given four different facilities for various reasons and the terms and conditions are as follows:

(i) An amount of GHS 34.0 million was approved and disbursed on 28th October, 2017 for the importation of heavy duty trucks. The loan was for a period of 24 months. As at 14th March,2020 the facility remains unpaid

(ii) The company was again granted an overdraft facility of GHS 20.0 million for 12 months after it was disbursed on 15th March, 2018 as a working capital. As at 18th March, 2020 the facility has not been paid and has become delinquent.

(iii) The third facility was a short term loan with a life span of 6 months. GHS 20.0million was disbursed on 31st March, 2016 and as at 31st December, 2017 the loan still remains unpaid.

(iv) The company was awarded a contract to by the Government of Ghana to execute the installation of telecommunication cables for National Communication Authority. This prompted the company to indent on the bank for a term loan of GHS 100.00 million. The loan was disbursed on 1st February, 2016 for 18 months. The company defaulted in the repayment of the facility and as at 31st December, 2019 the loan was still outstanding.

Required:

Calculate the Capital to Risk Assets Ratio assuming that:

1. Additional Tier 1 capital is GHS 15.0 million

2. Disclosed reserve is GHS 80.0 million

3. Preference/ Subordinated debt is GHS 39.0 million

4. Tier 2 capital is GHS 42.0 million. Assuming cost of borrowing is 20% for all the loans

Would you as a credit analyst approve further sanctioning of credit facilities to your.

(v) cherished customers based on your answer? Explain.