Vietnam: 05 minimum requirements of the credit institution's risk provision policy

13:01, 24/01/2013

This content is specified in Circular No. 02/2013/TT-NHNN 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.

Currently, credit institutions, foreign banks’ branches must issue internal regulations on credit extension, loan management, policy on risk provisions. Internal regulations on credit extension, loan management must meet minimally the conditions specified in Clause 2 Article 6 of Circular No. 02/2013/TT-NHNN of the State Bank of Vietnam. A policy on risk provisions must meet minimally the followings requirements:

yeu cau ve chinh sach du phong rui ro cua TCTD, Thong tu 02/2013/TT-NHNN

- In conformity with regulations of law on financial, accounting and report, statistical regimes;

- Having process to collect customers’ data and information, ensuring exact classification of debts, off-balance sheet commitments, management of bad debts, management of bad credit extension balance, setting up the sufficient provision as prescribed;

- Having specific regulations on classification of debts, off-balance sheet commitments, levels and method of setting up of risk provisions, and use of provisions against credit risks in the banking activity for each customer periodically, irregularly;

- Having regulations on powers, duties of units, individuals in classification of debts, off-balance sheet commitments, setting up of risk provisions, and use of provisions against credit risks in the banking activity;

- Having mechanisms to inspect, supervise and report for contents prescribed above.

View more provisions at Circular No. 02/2013/TT-NHNN of the State Bank of Vietnam, effective from June 01, 2014.

Thu Ba

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