This is the requirement under the Circular No. 02/2013/TTNHNN dated January 21, 2013 of the State Bank of Vietnam providing on classification of assets, levels and method of setting up of risk provisions, and use of provisions against credit risks in the banking activity of credit institutions, foreign banks’ branches.
Under this Circular, at least each quarter for one times, within 15 (fifteen) first days of first month of each quarter, credit institutions, foreign banks’ branches must selfimplement classification of debts, off-balance sheet commitments which have arisen until the ending time of final working day of last quarter, based on the capability of customers to pay debts and send results of self – classification of debts, off-balance sheet commitments to the Credit Information Center (CIC). The CIC shall summarize list of customers according to group of debts with highest risk extent. From that, credit institutions, foreign banks’ branches use result of classification of customer debt groups supplied by the CIC in order to adjust their result of classification of debts, off-balance sheet commitments; setting up sufficient provisions and use provisions for dealing with risks. Credit institutions, foreign banks’ branches implement classification of debts (excluding payments under off – balance sheet commitments) according to 05 groups as follows: standard debts group; debts, which need attention group includes debts which are restructured repayment term for the first time; debts which are overdue for a period of between 10 days and 90 days; sub-standard debts group; doubtful debts group and potentially irrecoverable debts group… Besides, the State Bank also requested that credit institutions, foreign banks’ branches must formulate the internal credit ranking system in order to rank customers periodically or as necessary, doing as basis for approval of credit extension, management of credit quality, formulation of policy on risk provisions in conformity with operational scope and actual situation of credit institutions, foreign banks’ branches… This Circular takes effect on June 01, 2013.