On July 11, 2024, the Government issued Decree 86/2024/ND-CP regulating the level of deductions, methods of setting up risk provisions, and the use of provisions to handle risks in the operations of credit institutions, foreign bank branches and cases where credit institutions allocate interest receivables that must be divested.
Here are some notable content:
1. Specific provisioning rates for debts classified from debt group 1 to debt group 5 of credit institutions (except microfinance institutions) and foreign bank branches. Specifically: Group 1: 0%; Group 2: 5%; Group 3: 20%; Group 4: 50%; Group 5: 100%.
2. Provision level for credit institutions (except microfinance institutions) and foreign bank branches: is determined at 0.75% of the total balance of debts classified from group debt 1 to debt group 4, except for the following: Deposits at credit institutions, foreign bank branches as prescribed by law and deposits at credit institutions abroad; Loans and term purchases of valuable papers between credit institutions and foreign bank branches in Vietnam.
3. The time to set up risk provisions for banks and non-bank credit institutions:
During the first 7 days of the month, commercial banks, non-bank credit institutions, and foreign bank branches make Currently making provisions for the end of the last day of the preceding month based on the debt group with the higher risk level between:
- Debt group according to the results of self-classification of debt at the end of the last day of the preceding month according to the regulations of the Governor of the State Bank on classification of assets in the operations of commercial banks and credit institutions. non-bank applications, foreign bank branches; and
- The debt group has been adjusted according to the debt group of the customer list provided by the Vietnam National Credit Information Center (CIC) according to the regulations of the Governor of the State Bank on classification of assets in operations. of commercial banks, non-bank credit institutions, foreign bank branches at the most recent time.
This Decree takes effect from July 11, 2024.
